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/raid1/www/Hosts/bankrupt/TCR_Public/061208.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, December 8, 2006, Vol. 10, No. 292 Headlines AFFINITY TECH: Reports Results of Patent Infringement Litigation AGILENT TECHNOLOGIES: Strategic Actions Cue S&P's Positive Watch ALLIED PROPERTIES: Judge Isgur Approves Houston Property Sale ALLIS-CHALMERS: Extends Exchange Offer Expiration to December 29 AMERICAN ACHIEVEMENT: Earns $11.3 Million in Fiscal Year 2006 ANVIL KNITWEAR: Files Schedules of Assets and Liabilities ANVIL KNITWEAR: U.S. Trustee Amends Official Committee Composition BIOVAIL CORP: Drops U.S. Sales Force; Discloses Strategic Plans BRESNAN BROADBAND: Good Performance Cues S&P's Positive Outlook BRIGHAM EXPLORATION: S&P Junks Rating on $125 Million Senior Notes BUNGE LIMITED: Moody's Rates New $690 Million Stock Issue at Ba1 CASCADES INC: Moody's Reviews Ratings and May Downgrade CB RICHARD: Completes 9-3/4% Senior Notes Tender Offer CEP HOLDINGS: Committee Hires Grant Thornton as Financial Advisor CMS ENERGY: PwC Replaces Ernst & Young as Independent Accountants COMPLETE RETREATS: Ultimate Resort Increases Bid to $100 Million COMPLETE RETREATS: U.S. Trustee Supports Panel's Fairfax Retention CUNNINGHAM LINDSEY: DBRS Junks Senior Unsecured Debt's Rating DELPHI CORPORATION: Judge Drain Approves SEC Settlement Agreement DELPHI CORPORATION: Wants to Amend Fee Structure for Rothschild DELPHI CORP: Orix Vacates Opposition to Lease Decision Extension DURA AUTOMOTIVE: Court Gives Final Nod on Vendor Claims Payment ELECTRONIC DATA: Promotes Ron Rittenmeyer to President EMAGIN CORP: Posts $3.7 Million Net Loss in 2006 Third Quarter ENRON CORPORATION: Wants Defendants' Interlocutory Appeal Denied ENRON CORP: UC Inks Settlement Pacts with Andersen and Kirkland ENTERGY NEW ORLEANS: Panel Wants Exclusivity Periods Terminated ENTERGY NEW ORLEANS: Sells Market Street Asset for $10 Million FAIRFAX FINANCIAL: Improved Liquidity Cues Moody's Stable Outlook FALCON AIR: Sells 100% Shares to Icon International for $4.2 Mil. FLOWSERVE CORP: Opens New Quick Response Center in Germany FOAMEX INTERNATIONAL: Names Stephen Markert as Interim CFO FOAMEX INTERNATIONAL: Court OKs Cure Amount Determination Protocol FOAMEX LP: Moody's Junks Rating on $190 Mil. 2nd Lien Senior Loan FOAMEX LP: S&P Junks Rating on $175 Mil. Senior Secured Facility FREESCALE SEMICON: S&P Pares Corp. Credit Rating to BB- from BB+ GE CAPITAL: Consistent Losses Prompt Fitch's Junk Ratings GEOKINETICS INC: Moody's Rates $100 Mil. Senior Sec. Notes at B3 GEOKINETICS INC: S&P Junks Rating on $175 Million Senior Facility GLOBAL POWER: Closes $85 Million DIP Financing Credit Facility GSMPS' MORTGAGE: Fitch Holds Low-B Ratings on Three Certificates GTSI CORP: Nasdaq Sets January 9 as Financials Filing Deadline GUESS? INC: Improved Performance Cues S&P's to Lift Rating to BB GULFMARK OFFSHORE: Sells 2 Million Shares to Jefferies & Company HARD ROCK: Las Vegas Hotel Sale Cues S&P to Hold Developing Watch HARTCOURT COS: Restates 2005 Quarter Ended August 31 Financials HOLYOKE HOSPITAL: Fitch Holds BB+ Rating on $11.4 Million Bonds INLAND FIBER: Court Extends Removal Period to January 15 INTELSAT LTD: Sept. 30 Balance Sheet Upside-Down by $494.6 Million INTERSTATE BAKERIES: Wants Board Affirmed; Brencourt Suit Enjoined INTERSTATE BAKERIES: Says Brencourt Suit Threatens Reorganization JP MORGAN: S&P Assigns Low-B Ratings on $79 Million Certificates K-TEL INT'L: Sept. 30 Balance Sheet Upside-Down by $12.3 Million LIBERTY MEDIA: Intends to Swap News Corp. Stake with DirectTV MASTR: Weaker-Than-Expected Performance Cues S&P's Negative Watch MAYFLOWER NATIONAL: A.M. Best Places B (Fair) Rating Under Review MERIDIAN AUTOMOTIVE: Judge Walrath Confirms Fourth Amended Plan MERIDIAN AUTOMOTIVE: Files Revised Fourth Amended Chapter 11 Plan MOSAIC COMPANY: Fitch Affirms BB- Issuer Default Rating NEWMARKET CORP: S&P Rates New $150 Million Senior Notes at BB NORAMPAC INC: Moody's Places Low-B Ratings Under Review NVIDIA CORP: Delayed Form 10-Q Filing Cues S&P to Remove Watch OMNI INSURANCE: A.M. Best Removes Rating from Review & Downgrades ORAGENICS INC: Incurs $559,160 Net Loss in Quarter Ended Sept. 30 PACER HEALTH: Earns $4.3 Million in 2006 Third Quarter PLATFORM LEARNING: Excl. Plan-Filing Period Intact Until Dec. 31 PLATFORM LEARNING: Judge Drain Approves $4.8MM DIP Loan Facility PRC LLC: S&P Rates Proposed $150 Mil. First-Lien Facilities at BB- PURADYN FILTER: Sept. 30 Balance Sheet Upside-Down by $5.2 Million RAPID PAYROLL: Disclosure Statement Hearing Slated for December 13 REFCO INC: Ch. 11 Trustee Wants RCM's Case Converted to Chapter 7 REFCO INC: BDO Stoy Appointed as Refco Trading's Liquidator REVLON CONSUMER: S&P Junks Rating on New $840 Million Senior Debt RFMSI: S&P Junks Rating on Class B-2 Debt and Removes Neg. Watch SAXON CAPITAL: Moody's Lifts Senior Unsecured Debt's Rating SEA CONTAINERS: GNER's UK East Coast Operation Franchise Ceased SENIOR HOUSING: Stable Performance Prompts S&P to Hold BB+ Rating SPECTRUM BRANDS: Fourth Quarter Net Loss Increases to $439.4 Mil. SURGILIGHT INC: Posts $291,259 Net Loss in 2006 Third Quarter TALLAGIUM CORP: Declares $1.2165 Dividend on Class B Shares TEEKAY SHIPPING: Subsidiary Registers 7 Million Common Units THERMOVIEW INDUSTRIES: Chap. 7 Trustee Wants Middleton as Counsel TIG CAPITAL: Moody's Revises Outlook on Preferred Stock to Stable ULTIMATE VENTURES: Cameron Kuipers Barred From Trading Securities UNITED AMERICAN: Sept. 30 Balance Sheet Upside-Down by $520,945 UTILITY CRAFT: Wants Plan-Filing Period Stretched to March 17 UTILITY CRAFT: Court Terminates Access to HPB's Cash Collateral VERIDICOM INT'L: Sept. 30 Balance Sheet Upside-Down by $5.6 Mil. WINDSWEPT ENVIRONMENTAL: Earns $14.1 Mil. in Fiscal 2007 1st Qtr. WINN-DIXIE: Post-Emergence Administrative Bar Date is January 5 XACT AID: Earns $168,842 in First Fiscal Quarter Ended Sept. 30 * Turnaround Expert Solsvig Joins AlixPartners' New York Office * BOOK REVIEW: A Treatise on the Right of Property in Tide Waters ********* AFFINITY TECH: Reports Results of Patent Infringement Litigation ---------------------------------------------------------------- Affinity Technology Group, Inc., disclosed results of its Markman hearing related to its patent infringement lawsuits against Ameritrade, Federated Department Stores and HSBC, formerly Household International. The Markman hearing was held by the trial judge for purposes of interpreting the scope of the claims of the company's patents. The Court construed the meaning of numerous claim terms, which bear on the scope of the patents. Almost all of the terms were construed in a manner the company believes are favorable; however, the trial judge construed a few claim terms, most notably those related to the term "remote interface" as claimed in the Company's second loan processing patent (U.S. Patent No. 5,940,811 C1) and its financial account patent (U.S. Patent No. 6,105,007 C1), in a manner unacceptable to the company. In these patents, the Court construed "remote interface" to mean computer equipment, including personal computer equipment, that is not owned by a consumer. The Court applied no such limitation in construing the term "remote interface" under the company's first loan processing patent (U.S. Patent No. 5,870,721 C1). The company is currently evaluating additional actions to obtain a favorable construction of the unfavorably construed terms. "The trial judge interpreted most terms under consideration in a manner acceptable to the Company, including confirmation that the communications network embodied in the Company's patents included the Internet," Joe Boyle, Chairman, President and Chief Executive Officer of Affinity, stated. "However, the trial judge interpreted the term 'remote interface' as claimed in our second loan processing patent and our financial account patent to exclude personal computers 'owned by consumers.' This limitation was not applied to our first loan-processing patent, and we believe that the interpretation applied to this patent should be applied to our other patents. We are evaluating our post-hearing alternatives to further pursue this matter, which may include an appeal to the Federal Circuit Court of Appeals." About Affinity Technology Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. (OTCBB:AFFI) -- http://www.affi.net/-- owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant-directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. At Sept. 30, 2006, the company's balance sheet showed a stockholders' deficit of $2,633,909, as compared to a deficit of $2,048,371 at Dec. 31, 2005. Going Concern Doubt As reported in the Troubled Company Reporter on April 19, 2006, Scott McElveen, L.L.P., expressed substantial doubt about Affinity Technology Group, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring operating losses, accumulated deficit, and default on certain convertible. AGILENT TECHNOLOGIES: Strategic Actions Cue S&P's Positive Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB+' corporate credit rating on Palo Alto, California-based Agilent Technologies Inc. on CreditWatch with positive implications. "The CreditWatch action was taken following the recent completion of various strategic actions, which have resulted in the transformation of Agilent into a pure-play measurement company," said Standard & Poor's credit analyst Ben Bubeck. Over the past five quarters, Agilent has divested its semiconductor products group, sold its stake in the Lumileds joint venture, and most recently, spun off Verigy Ltd., which constituted portions of its automated test business. Proceeds from these actions were used to call a $1.1 billion convertible note and largely funded $4.5 billion of share repurchases. Agilent has also taken cost containment actions including headcount reductions and consolidation of various sites, targeted at building the cost structure around the remaining business. Agilent's remaining measurement business segments, bio-analytical measurement and electronic measurement, posted total revenues of nearly $5 billion during fiscal 2006, ended October, representing a leading market position in the test and measurement industry. Standard & Poor's expect that Agilent's business risk profile will benefit from the lower volatility of these remaining segments. As of Oct. 31, 2006, Agilent's funded debt was limited to $1.5 billion, which is offset by $1.6 billion of restricted investments. Net cash balances were about $2.3 billion. Resolution of the CreditWatch listing will consider the improvement to Agilent's business profile, while taking into consideration management's financial policies and growth strategy. ALLIED PROPERTIES: Judge Isgur Approves Houston Property Sale ------------------------------------------------------------- Randy W. Williams, the Chapter 7 Trustee appointed in Allied Properties LLC's bankruptcy case, obtained authority from the Honorable Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas to sell substantially all the Debtor's assets free from all encumbrances and other interests. Judge Isgur also approved corresponding bidding procedures. The Debtor owns real property known as the Galleria Corridors I and II located at 5821 and 5851 Southwest Freeway in Houston, Texas. Allison D. Byman, Esq., at Thompson & Knight LLP relates that the Trustee had sought financing to continue the operations of the Property. PIM Black Mountain Domestic Venture I LLC, the Debtor's prepetition secured lender, advanced funds on an emergency basis to avoid termination of the Property's utility services. Black Mountain had also agreed to provide debtor-in-possession financing of up to $150,000 to the Trustee, subject to Court approval. Ms. Byman tells the Court that, at the time of the Trustee's appointment, there were no funds available in order to operate the Property. Consequently, the Trustee had determined that borrowing funds to keep up with and improve the property's operations would not generate any additional benefit to the Debtor's Chapter 7 estate, Ms. Byman said. In order to maximize distribution to creditors, the Trustee instituted the Court-approved bidding procedures. A copy of the approved bidding procedures is available for free at: http://researcharchives.com/t/s?167d Ms. Byman explains that if the Property is sold to a third party, as opposed to Black Mountain, the sale will be free and clear of all encumbrances pursuant to Sections 363(b)(e)(f) and (m) of the U.S. Bankruptcy Code. The proceeds of the sale will be used as: 1) payment for customary closing costs; 2) payment for real estate taxes; 3) commission for the Trustee; 4) reserve for the Trustee's professional fees up to $70,000; 5) repayment of the Black Mountain DIP Financing; 6) repayment of the Black Mountain non-debtor in possession advances to the Chapter 7 estate; 7) $9,500,000 in proceeds to Black Mountain in partial satisfaction of its prepetition secured claims against the Property; 8) $250,000 in proceeds to be retained by the Trustee for distribution to creditors of the Chapter 7 Estate; 9) payment of any unpaid amount owing to Black Mountain on account of its prepetition secured claim against the Property; and 10) residual amounts to the Debtor. Headquartered in Houston, Texas, Allied Properties, LLC, is a real estate developer. The company filed for chapter 11 protection on August 1, 2006 (Bankr. S.D. Tex. Case No. 06-33754). Leonard H. Simon, Esq., at Pendergaft & Simon, LLP, represented the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. In its schedules of assets and liabilities, it listed $24,000,072 in assets and $16,424,907 in debts. The Honorable Marvin Isgur converted the Debtor's bankruptcy case into a Chapter 7 liquidation proceeding on Oct. 13, 2006. Randy W. Williams was appointed as the Debtor's Chapter 7 Trustee. Thompson Knight LLP represents the Chapter 7 Trustee. ALLIS-CHALMERS: Extends Exchange Offer Expiration to December 29 ---------------------------------------------------------------- Allis-Chalmers Energy Inc. extended the expiration of the exchange offer relating to its 9% Senior Notes due 2014 to 5:00 p.m. (New York City time) on Dec. 29, 2006. The extension is made pending dissemination of financial information relating to the company's recently completed acquisition of Petro-Rentals, Incorporated and its pending acquisition of substantially all of the assets of Oil & Gas Rental Services, Inc. The exchange offer is being made solely by Allis-Chalmers' prospectus with respect to the exchange offer and the related letter of transmittal. Copies of the prospectus and letter of transmittal may be obtained from the exchange at: By Registered or Certified Mail: Wells Fargo Bank, N.A. MAC N9303-121 P.O. Box 1517 Minneapolis, MN 55480-1517 Attn: Corporate Trust Operations By Regular Mail/ Hand/ Overnight Delivery: Wells Fargo Bank, N.A. Sixth and Marquette MAC N9303-121 Minneapolis, MN 55479 Attn: Corporate Trust Operations Based in Houston, Texas, Allis-Chalmers Energy Inc. (AMEX: ALY) -- http://www.alchenergy.com/-- provides oilfield services and equipment to the oil and gas exploration and development companies primarily in Texas, Louisiana, New Mexico, Colorado, and Oklahoma; offshore in the United States Gulf of Mexico; and offshore and onshore in Mexico. The company offers directional drilling, compressed air drilling, casing and tubing, rental tools, and production services. * * * As reported in the Troubled Company Reporter on Sept. 27, 2006, Moody's Investors Service confirmed Allis-Chalmers Energy Inc.'s B3 Corporate Family Rating and B3 rating on the company's 9% Senior Unsecured Guaranteed Global Notes Due 2014. AMERICAN ACHIEVEMENT: Earns $11.3 Million in Fiscal Year 2006 ------------------------------------------------------------- American Achievement Corp. reported $11.3 million of net income on $320.9 million of sales for the fiscal year ended Aug. 26, 2006, compared with a $6.7 million net income on $313.8 million of sales for the fiscal year ended Aug. 27, 2005. The increase in net income is primarily due to the $7.1 million increase in net sales attributable to stronger sales of on-campus class rings, graduation products and yearbooks. At Aug. 26, 2006, the company's balance sheet showed $498.5 million in total assets and $365 million in total liabilities, resulting in a $133.5 million total stockholders' equity. Full-text copies of the company's consolidated financial statements for the fiscal year ended Aug. 26, 2006, are available for free at http://researcharchives.com/t/s?1692 Liquidity and Capital Resources Operating activities provided $29.3 million of cash during fiscal year 2006, compared to $37.4 million during fiscal year 2005. The decline in cash provided by operating activities during fiscal 2006 was attributable to increased gold inventory, a decline in customer deposits and other increased working capital requirements, partially offset by improved earnings. Capital expenditures in fiscal 2006 were $12.5 million compared to $12.8 million in fiscal year 2005. In both years, the majority of capital expenditures were primarily attributable to purchases of new printing presses and fully integrating digital technology throughout the company's yearbook production process. Net cash used in financing activities was $18.0 million for fiscal 2006 compared to net cash used of $23.6 million for fiscal 2005. In fiscal 2006, cash was used to pay down $32.6 million of the term loan. This was partially offset by net revolver borrowings of $9.3 million and a $7.0 million capital contribution from Intermediate Holdings. About American Achievement Austin, Texas-based American Achievement Corporation -- http://www.cbi-rings.com/-- is an indirect wholly owned operating subsidiary of AAC Group Holding Corp. American Achievement provides products associated with graduation and important event commemoration, including class rings, yearbooks, graduation products, achievement publications and affinity jewelry through in-school and retail distribution. American Achievement's brands include: Balfour and ArtCarved, providers of class rings and graduation products; Educational Communications, Inc., publisher of Who's Who Among American High School Students(R); Keepsake Fine Jewelry; and Taylor Publishing, publisher of yearbooks. AAC has 1,840 employees and is majority-owned by Fenway Partners Capital Fund II, L.P. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, Moody's Investors Service revised its probability-of-default rating on American Achievement Corporation's $150 million senior subordinated notes due 2012 from B2 to B1. Moody's also assigned an LGD3 rating on said notes. ANVIL KNITWEAR: Files Schedules of Assets and Liabilities --------------------------------------------------------- Anvil Holdings Inc., Anvil Knitwear Inc., and Spectratex Inc. delivered to the U.S. Bankruptcy Court for the Southern District of New York in Manhattan their schedules of assets and liabilities, disclosing: Anvil Holdings Inc. ------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property Unknown C. Property Claimed as Exempt D. Creditors Holding Secured Claims $25,800,000 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Nonpriority Claims $137,000,000 ------- ------------ Total Unknown $162,800,000 Anvil Knitwear Inc. ------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $9,884,531 B. Personal Property $76,597,455 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $25,806,926 E. Creditors Holding Unsecured Priority Claims $182,520 F. Creditors Holding Unsecured Nonpriority Claims $139,443,893 ----------- ------------ Total $86,481,986 $165,433,339 =========== ============ Spectratex Inc. --------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $1,297,203 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $25,800,000 E. Creditors Holding Unsecured Priority Claims $32,077 F. Creditors Holding Unsecured Nonpriority Claims $137,195,069 ---------- ------------ Total $1,297,203 $163,027,146 ========== ============ Full-text copies of their schedules of assets and liabilities are available for free at: Anvil Holdings Inc. http://ResearchArchives.com/t/s?168d Anvil Knitwear Inc. http://ResearchArchives.com/t/s?168e Spectratex Inc. http://ResearchArchives.com/t/s?168f About Anvil Holdings Headquartered in New York, Anvil Holdings, Inc., is a Delaware holding company with no material operations and owns all of the outstanding common stock of Anvil Knitwear, Inc. Anvil Knitwear, in turn, owns all of the outstanding common stock of Spectratex, Inc., fka Cottontops, Inc. The Debtors design, manufacture, and market active wear. The Debtors filed for chapter 11 protection on Oct. 2, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12345 through 06-12347). Richard A. Stieglitz, Jr., Esq., Stephen J. Gordon, Esq., and Joel H. Levitin, Esq., at Dechert LLP represent the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. The Debtors' consolidated financial data as of July 29, 2006, showed total assets of $110,682,000 and total debts of $244,586,000. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. ANVIL KNITWEAR: U.S. Trustee Amends Official Committee Composition ------------------------------------------------------------------ Diana G. Adams, the acting U.S. Trustee for Region 2, amended the list of creditors making up the Official Committee of Unsecured Creditors in Anvil Knitwear Inc. and its debtor-affiliates' chapter 11 cases. Papers filed with the Court did not disclose the reasons for the amendment. The amended committee is now composed of: a. The Bank of New York 101 Barclay Street New York, NY 10286 Attn: Neill Schreyer Tel: (212) 815-5650 b. Resolution Partners LLC 909 Third Avenue, 30th Floor New York, NY 10022 Attn: Sam Perlman Tel: (212) 350-1950 c. LC Capital Master Fund Ltd. c/o Lampe, Conway & Co. LLC 680 Fifth Avenue, Suite 1202 New York, NY 10019-5429 Attn: Richard Conway Tel: (212) 581-8989 d. Cekal Specialties Inc. 101 Brickyard Road Mount Holly, NC 28120 Attn: Dallas D. Crotts, President Tel: (704) 822-6206 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in New York, Anvil Holdings, Inc., is a Delaware holding company with no material operations and owns all of the outstanding common stock of Anvil Knitwear, Inc. Anvil Knitwear, in turn, owns all of the outstanding common stock of Spectratex, Inc., fka Cottontops, Inc. The Debtors design, manufacture, and market active wear. The Debtors filed for chapter 11 protection on Oct. 2, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12345 through 06-12347). Richard A. Stieglitz, Jr., Esq., Stephen J. Gordon, Esq., and Joel H. Levitin, Esq., at Dechert LLP represent the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. The Debtors' consolidated financial data as of July 29, 2006, showed total assets of $110,682,000 and total debts of $244,586,000. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. BIOVAIL CORP: Drops U.S. Sales Force; Discloses Strategic Plans --------------------------------------------------------------- Biovail Corporation will no longer maintain a U.S.-based sales organization, and that it intends to enter into supply-and- distribution agreements with strategic partners to target physicians groups in the United States. As a result of this decision, the company has enhanced the operational efficiency of its business model. In addition, the company said that it would drive business growth through a targeted focus on a number of core research-and- development programs. These strategic initiatives are expected to reduce operating costs and improve operating efficiencies. Biovail is effecting these changes following a comprehensive review of all aspects of the company's business. As part of the strategic review process, Biovail has decided that it will leverage strategic partners to promote its products to specialist physicians in the U.S., which is consistent with the company's current approach to commercializing products in the U.S. primary-care market. As a result, the Biovail Pharmaceuticals, Inc. specialty sales force and related support functions will be eliminated. Given these changes, BPI will cease co-promotional efforts for Ultram(R) ER. With respect to Zovirax(R), Biovail is in active discussions with multiple potential partners to maintain promotional support for the product line. The company anticipates an announcement with respect to these discussions in the near term. In addition, after a comprehensive analysis of each of Biovail's corporate and functional areas, overhead and infrastructure costs will be reduced to improve operating efficiencies, without sacrificing effectiveness. "The changes to our business model will improve our operating efficiencies and margins, and will allow us to further focus on our core competency - the development and large-scale manufacture of novel medicines employing our drug-delivery technologies," said Biovail Chief Executive Officer Dr. Douglas Squires. "While restructuring initiatives are never easy, Biovail strongly believes that this 'back-to-basics' approach is consistent with its heritage and commitment to maximize shareholder value." In Canada, Biovail will maintain its direct-selling commercial presence through Biovail Pharmaceuticals Canada, which has an enviable track record of success in promoting products to health- care practitioners across the country. The relative size of the Canadian market makes a direct-selling presence more feasible within the company's current infrastructure. The 100-member BPC sales force currently promotes Tiazac(R) XC, Wellbutrin(R) XL, Glumetza(TM) and the Lescol(R) franchise to Canadian physicians. Business development efforts to identify new products for BPC will continue. The cost-cutting measures are expected to result in restructuring charges (primarily related to severance costs), the majority of which will be booked in the fourth quarter of 2006. Focus on Research and Development Biovail intends to materially increase its investment in research and development over the next several years. The company will focus its efforts on three core segments: (1) enhanced formulations of existing products, (2) combination products incorporating different classes of drugs, and (3) difficult-to-manufacture generic pharmaceuticals. "Beginning with the launch of Tiazac(R) 10 years ago, Biovail's growth has been driven by the successful application of our drug- delivery technologies. Since then, we've developed over 15 pharmaceutical products and have generated over $4.6 billion in Biovail product revenues," said Eugene Melnyk, Biovail's Chairman. "Biovail's new strategy, which was unanimously approved by the Board, is consistent with our heritage. Going forward, we will drive business growth through a renewed focus on internal research-and-development efforts." With respect to previously disclosed pipeline products, Biovail remains in partnership discussions with several pharmaceutical companies for commercialization rights. Given the inherent development risk with any pharmaceutical product, engaging strategic partners earlier in the product-development cycle may allow programs to be progressed in a more cost-effective manner, while maximizing the available number of pipeline opportunities and their potential for success. Additionally, Biovail has amended its April 2002 agreement with Ethypharm S.A. to now include the development of four undisclosed products. Among these are BVF-087 and BVF-065, which target large markets in central nervous system disorders; BVF-239, a cardiovascular product; and BVF-300, a product targeting the gastrointestinal-disease market. In aggregate, these novel formulations target brands with U.S. sales in excess of $9 billion, according to IMS Health. About Biovail Based in Ontario, Canada, Biovail Corp. (NYSE: BVF) (TSX: BVF) -- http://www.biovail.com/-- is a specialty pharmaceutical company, engaged in the formulation, clinical testing, registration, manufacture and commercialization of pharmaceutical products utilizing advanced drug-delivery technologies. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Moody's Investors Service revised Biovail Corporation's rating outlook to stable from negative and affirmed Corporate Family Rating's at Ba3, and Senior Subordinated Notes at B1. Additionally, Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 67% loss in the event of a default. BRESNAN BROADBAND: Good Performance Cues S&P's Positive Outlook --------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Purchase, New York-based cable operator Bresnan Broadband Holdings LLC to positive from stable. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating and all other ratings on Bresnan. Total debt outstanding as of Sept. 30, 2006, was approximately $474 million. "The outlook revision reflects the company's improved operating and financial performance," said Standard & Poor's credit analyst Allyn Arden. During the third quarter of 2006, Bresnan delivered healthy double-digit revenue and EBITDA growth year-over-year due to increased penetration of high-speed data and telephony services. This trend has been consistent with the last few quarters. Additionally, the company has improved its EBITDA margin to over 30% from less than 30% at year-end 2005, although margins are still below the industry average. Standard & Poor's expects Bresnan to generate modest discretionary cash flow in the second half of 2007 as a result of EBITDA growth. The ratings on Bresnan continue to reflect a highly leveraged financial profile, including debt to EBITDA in the 5x area; below- industry average EBITDA margins; high churn of about 3% per month; and limited opportunities for cost efficiencies because of small scale and low system densities. Tempering factors: -- include weak competition for voice and data in generally low-density markets, primarily from Qwest Communications Corp.; -- a fully upgraded plant with two-way capability along with the revenue potential associated with offering enhanced services; and, -- the deployment of cable telephony, which is contributing to win-backs from the satellite providers. Bresnan serves rural markets in Montana, Wyoming, Colorado, and Utah with over 600,000 homes passed and roughly 290,000 basic video subscribers. BRIGHAM EXPLORATION: S&P Junks Rating on $125 Million Senior Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on oil and gas exploration and production company Brigham Exploration Co. At the same time, Standard & Poor's lowered its rating on the company's $125 million senior notes due 2014 to 'CCC+' from 'B-'. The outlook remains stable. As of Sept. 30, 2006, Austin, Texas-based Brigham had $125 million in long-term debt. The increase of the borrowing base on Brigham's revolving credit facility to $110 million from $50 million prompted the downgrade of the unsecured notes. "Assuming a fully drawn credit facility, Brigham's priority debt will exceed 15% of the book value of the company's assets, which is our current guideline for lowering an unsecured issue rating by one notch relative to the corporate credit rating," said Standard & Poor's credit analyst Jeffrey B. Morrison. The stable outlook for Brigham reflects expectations that near-term cash flow and liquidity should be adequate to fund planned capital expenditures and debt service. BUNGE LIMITED: Moody's Rates New $690 Million Stock Issue at Ba1 ---------------------------------------------------------------- Moody's Investors Service confirmed the Baa2 senior unsecured ratings for Bunge Limited and guaranteed subsidiaries. Moody's also assigned a Ba1 rating to a new $690 million issue by Bunge Limited of perpetual preferred stock. The outlook on all ratings is negative. The confirmation reflects Moody's comfort that the Baa2 rating continues to reflect the company's strong global agribusiness franchise, as well as the volatility that can occur in the company's earnings and cash flow. The Ba1 rating on the new preferred stock considers Bunge's underlying Baa2 senior unsecured rating and the relative priority of claim of the preferred securities within the capital structure. The negative outlook reflects the deterioration in Bunge's debt protection measures, the higher-than-expected debt levels, and the expectation that Bunge's high levels of capital investment and acquisitions could prevent the company from restoring its debt protection measures to levels sufficient to maintain its current ratings. Downward rating pressure could build should the company's operating performance fail to significantly improve during 2007, leverage increase such that RCF/Debt fell and likely remain below the 16 -- 20% range, and/or free cash flow remains negative. "While earnings and cash flow volatility are normal in commodity processing industries, Bunge must improve its debt protection measures and financial flexibility if it is to remain at its current rating levels" stated Peter Abdill, Senior Vice President at Moody's. Ratings assigned and confirmed: * Bunge Limited -- $690 million perpetual preferred stock at Ba1 * Bunge Limited Finance Corp. -- Senior unsecured at Baa2 under full guarantee of Bunge Limited * Bunge Master Trust -- Senior unsecured at Baa2 under full guarantee of Bunge Limited Bunge's Baa2 rating is supported by its strong position in the agricultural commodity processing industry, its strong position and competitive advantages in Brazilian fertilizer, its geographic diversity, as well as its adequate liquidity profile. These positives are tempered by Bunge's exposure to commodity markets which present a number of uncontrollable and often unpredictable factors which can result in earnings and cash flow volatility, as well as Bunge's significant exposure to developing markets -- such as Brazil and Argentina. Moody's view Bunge's operations as fundamentally less diversified than some of its competitors. Ratings are also influenced by the company's significant capital expenditure program and the negative free-cash flow which has resulted. Bunge's financial profile is characterized by low margins and weak returns on invested capital. Moody's rates a $690 million issue of convertible preferred stock, and has assigned this security to Basket "C" for analytic purposes, i.e. 50% equity and 50% debt. The basket allocation is based on the following rankings for the three dimensions of equity: No maturity: * Strong -- The securities are perpetual and non-callable, and convertible by investors at any time or by the company under certain circumstances. No ongoing payments: * Weak -- Dividends may be paid in cash, or will accrue, at the option of the company. If not paid in cash, dividends accrue and may only be settled with common stock. However the securities do not contain any meaningful mandatory caps on the accumulation of dividends not paid in cash, thereby weakening this dimension of equity. Loss absorption: * Strong -- The securities represent a preferred claim in bankruptcy, senior only to common equity. Headquartered in White Plains, New York, Bunge is a global agribusiness company with operations primarily in commodity grain processing and fertilizer production. CASCADES INC: Moody's Reviews Ratings and May Downgrade ------------------------------------------------------- Moody's Investors Service placed under review for possible downgrade Cascades Inc.'s Ba2 corporate family rating, its Baa3 senior secured rating, and its Ba3 senior unsecured rating. At the same time, Moody's placed under review, with direction uncertain, Norampac Inc.'s Ba3 corporate family rating, its Ba1 senior secured rating, and its B1 senior unsecured rating. The reviews were prompted by the report that Cascades will purchase the 50% of Norampac that it does not already own from Domtar Inc., for a purchase price of CDN$560 million. Cascades also reported that the transaction will be paid for with the proceeds of an up to CDN$200 million offering of common shares through a subscription receipt offering, a concurrent Cdn$50 million offering of common shares, and debt. The review for possible downgrade of Cascades reflects the incremental debt of CDN$310 million to CDN$360 million that will be taken on to complete the acquisition. The review of Norampac with direction uncertain reflects that its existing ratings may go up or down depending on the final legal and capital structure of the two companies. Ratings under Review for possible downgrade: * Cascades Inc. -- Corporate Family Rating at Ba2, LGD4, 69% -- Senior Unsecured at Ba3, LGD4, 69% -- Senior Secured at Baa3, LGD2, 15% Ratings under Review (direction uncertain): * Norampac Inc. -- Corporate Family Rating at Ba3, LGD5, 74% -- Senior Unsecured at B1, LGD2, 69% -- Senior Secured at Ba1, LGD2, 15% The review will focus on: -- the amount of debt taken on by Cascades to complete the acquisition; -- Cascades' plan, if any, to reduce acquisition debt from internally generated cash flow, the timeframe involved, and Moody's view of the ability of the company to do so; and, -- the final legal and capital structure of the combined companies and whether any of the existing or new debt is structurally subordinated. This analysis of the legal and capital structure will have an impact on notching only, and not on the corporate family rating. The last rating action on Cascades was an affirmation of its Ba2 coprorate family rating in June 2006. The last rating action on Norampac was a downgrade of it corporate family rating to Ba3 in June 2006. Cascades Inc. is a Kinsey Falls, Quebec-based packaging and paper company producing boxboard, containerboard, specialty packaging products and tissue. Consolidated revenues in 2005 were CDN$3.5 billion. Norampac Inc. is a Montreal based containerboard producer that had revenue in 2005 of CDN$1.3 billion. CB RICHARD: Completes 9-3/4% Senior Notes Tender Offer ------------------------------------------------------ CB Richard Ellis Services Inc., a wholly owned subsidiary of CB Richard Ellis Group Inc., disclosed the completion of the Company's reported cash tender offer and consent solicitation to purchase all of its 9-3/4% Senior Notes due 2010. A total of $126,690,000 in aggregate principal amount of Notes, or approximately 97.5% of the outstanding principal amount of the Notes, were tendered prior to the expiration date of 5:00 p.m., New York City time, on Dec. 4, 2006. The company has accepted for purchase and has paid for, all Notes tendered pursuant to the Offer. On Nov. 17, 2006, the company, CB Richard Ellis Group, Inc., certain subsidiary guarantors and the indenture trustee executed a supplemental indenture effecting certain amendments to the indenture governing the Notes. The amendments, which eliminate or modify the restrictive covenants and certain events of default, became operative upon acceptance of the Notes for purchase. Credit Suisse Securities (USA) LLC acted as Dealer Manager in connection with the Offer. Headquartered in Los Angeles, California, CB Richard Ellis Services, Inc., provides commercial real estate services. Services it provides include property sales/leasing brokerage, property management, corporate services and facilities management, capital markets advice and execution, appraisal/valuation services, research and consulting. CB Richard Ellis has approximately 14,500 employees and over 200 offices across more than 50 countries. * * * As reported in the Troubled Company Reporter on Nov 16, 2006, Standard & Poor's Ratings Services affirmed its ratings on CB Richard Ellis Services Inc., including its 'BB+' long-term counterparty credit rating, and removed them from CreditWatch Negative where they were placed Oct. 31. The outlook is stable. CEP HOLDINGS: Committee Hires Grant Thornton as Financial Advisor ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in CEP Holdings, LLC and its debtor affiliates' chapter 11 cases, obtained authority from U.S. Bankruptcy Court for the Northern District of Ohio Eastern Division to retain Grant Thornton LLP as its financial advisor, nunc pro tunc to Oct. 1, 2006. Grant Thorton will: (a) assist in the review of reports or filings as required by the Bankruptcy Court of the Office of the U.S. Trustee, including schedules of assets and liabilities, statements of financial affairs and monthly operating reports; (b) evaluate the Debtors' financial information, including analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; (c) evaluate and analyze the reporting with regard to cash collateral and any debtor-in-possession financing arrangements and budgets; (d) evaluate potential employee retention and severance plans; (e) assist with identifying and implementing asset redeployment opportunities; (f) analyze assumption and rejection issues regarding executory contracts and leases; (g) evaluate and analyze the Debtors' proposed business plans and the general business and financial condition of the Debtors'; (h) assist in evaluating reorganization strategy and alternatives available to the creditors; (i) evaluate and assess the Debtors' financial projections and assumptions; (j) evaluate enterprise, asset and liquidation valuations; (k) advice and assist the Committee in negotiations and meetings with the Debtors and the bank lenders; (l) provide litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; and (m) other advisory services requested by the Committee or its counsel to assist the Committee in the chapter 11 cases. Grant Thornton's professionals who are assigned to the Debtors' chapter 11 cases, will bill: Professional Designation Hourly Rate ------------ ----------- ----------- Kimberly Davis Rodriguez Principal $385 Laura Marcero Director $335 Robert Tague Manager $250 Jack Serda Associate $195 Other professionals that may be assigned to the Debtors' cases bill: Designation Hourly Rate ----------- ----------- Principal/Partner $500 Director/Senior Manager $460 Manager $300 - $395 Sr. Associate $200 - $265 Associate $165 - $175 Administrative $75 - $120 Marti Kopacz, a managing principal at Grant Thornton's U.S Recovery and Reorganization Services, tells the Court that Stout Risius Ross, Inc.'s Restructuring and Performance Improvement Group had received a $30,000 prepetition retainer from the Debtors. The Group was acquired from SRR by Grant Thornton and SRR had agreed to transfer the $30,000 retainer to the firm. Ms. Kopacz assures the Court that her firm is a "disinterested person" as the term is defined in section 101(14) of the Bankruptcy Code. Based in Akron, Ohio, CEP Holdings, LLC, manufactured hard, molded rubber products and extruded plastic materials for companies in the automotive, construction, and the medical industries. The Company and two of its subsidiaries filed for chapter 11 protection on Sept. 20, 2006 (Bankr. N.D. Ohio Case No. 06-61796). McGuireWoods LLP represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 18, 2007. CMS ENERGY: PwC Replaces Ernst & Young as Independent Accountants ----------------------------------------------------------------- CMS Energy Corporation and Consumers Energy Company dismissed Ernst & Young LLP and appointed PricewaterhouseCoopers LLP as their independent registered public accounting firm. The decision to dismiss Ernst & Young was recommended and approved by the Audit Committees of the Boards of Directors of both CMS Energy and Consumers and was the result of a competitive bidding process conducted in the ordinary course of business. Ernst & Young will continue as the auditors for the consolidated financial statements of CMS Energy and Consumers for the fiscal year ending Dec. 31, 2006, the financial statements of the Employees' Savings Plan and Employee Stock Ownership Plan of Consumers for the fiscal year ending Dec. 31, 2006. The company disclosed that through Nov. 30, 2006, there were no disagreements with Ernst & Young on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures. The Company also disclosed that there have been no "reportable events" as defined in Regulation S- K, Item 304(a) (1) (v), except for a material weakness at CMS Energy regarding internal controls over financial reporting relating to accounting for income taxes. The company further disclosed that Ernst & Young's reports on its and Consumers consolidated financial statements for the fiscal years ended Dec. 31, 2005 and 2004 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. PricewaterhouseCoopers LLP will become the independent registered public accounting firm for CMS Energy, Consumers and the Benefit Plan for the year ending Dec. 31, 2007. CMS Energy Corporation -- http://www.cmsenergy.com/-- is a Michigan-based company that has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. Through its regulated utility subsidiary, Consumers Energy Co., the company provides natural gas and electricity to almost 60% of nearly 10 million customers in Michigan's lower-peninsula counties. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service lowered its Corporate Family Rating for CMS Energy Corp. to Ba2 from Ba1, in connection with its new Probability-of-Default and Loss-Given-Default rating methodology. COMPLETE RETREATS: Ultimate Resort Increases Bid to $100 Million ---------------------------------------------------------------- At the Nov. 29, 2006 hearing, Ultimate Resort LLC increased its bid for substantially all of Complete Retreats LLC and its debtor-affiliates' assets to $100,000,000. Ultimate Resort previously proposed to buy the Debtors' assets for $98,000,000. The Debtors and the Official Committee of Unsecured Creditors have determined that Ultimate Resort's offer is the highest and best bid for the assets. Preeminent Global Experience LP, a qualified bidder, also increased its bid to $112,000,000 at the hearing. Preeminent Global delivered to the U.S. Bankruptcy Court for the District of Connecticut a proposed asset purchase agreement, which reflects the differences in its and Ultimate Resort's bids. Preeminent Global's proposed asset purchase agreement is available for free at http://researcharchives.com/t/s?1652 Preeminent Global's current bid for the Debtors' assets include, inter alia: * a $10,000,000 higher cash purchase price for the same assets and assumption of substantially the same liabilities; * a $10,000,000 deposit; * no break-up fee; * a minimum of 375 consenting Members versus Ultimate Resort's 400; * a viable destination club with strong financial backing; and * legally appropriate methodology regarding amendment, assumption, and assignment of Member contracts. The Court will convene a hearing on Dec. 19, 2006, to further consider the sale of the Debtors' assets. The Court previously approved the Debtors' request to amend their asset purchase agreement with Ultimate Resort, under which, the Debtors and Ultimate Resort agreed to lower: (a) the Deposit from $10,000,000 to $4,000,000; and (b) the Break-Up Fee from $2,500,000 to $2,000,000. If the agreement is terminated because Ultimate Resort is unable to secure sufficient funds to make the sale payments, then the Debtors will retain and be paid 50% of the deposit as their sole right or recourse for the termination. A full-text copy of the Debtors' amended asset purchase agreement with Ultimate Resort is available for free at: http://researcharchives.com/t/s?1651 About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. The Debtors' exclusive period to file a plan expires on February 18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: U.S. Trustee Supports Panel's Fairfax Retention ------------------------------------------------------------------ Diana Adams, the acting United States Trustee for the District of Connecticut, notifies the U.S. Bankruptcy Court for the District of Connecticut that she has no objection to the retention of The Fairfax Group as forensic advisor to the Official Committee of Unsecured Creditors in Complete Retreats LLC and its debtor- affiliates' bankruptcy cases. As reported in the Troubled Company Reporter on Nov. 8, 2006, the Committee sought the Court's authority to retain Fairfax Group as its forensic advisor, nunc pro tunc to Sept. 11, 2006. Committee Chair Joel S. Lawson III told the Court that the Committee formed a subcommittee of its members to interview and evaluate candidates qualified to perform the type of forensic accounting and investigatory due diligence services required in the Debtors' cases. After soliciting qualification materials from, and rigorously interviewing various candidates, the subcommittee recommended the retention of Fairfax as the Committee's forensic advisor. Mr. Lawson noted that Fairfax employs and has working professional relationships with some of the world's leading experts in compliance, investigations and security. Fairfax's past engagements have included rendering service in the areas of corporate internal investigations; due diligence; asset tracing and anti-money laundering; electronic evidence-gathering and preservation; witness identification and interview; documentary evidence gathering and research of corporate and individual histories. Fairfax will, among others, perform forensic accounting and investigatory due diligence concerning the Debtors; the Debtors' businesses and operations; and any individuals or entities with whom the Debtors, their officers, directors, shareholders, agents and employees, have done business or may decide to do business. Fairfax will also analyze all relevant information from the time of the Debtors' formation through and including the present. The Committee reserves its rights to augment or authenticate the work of XRoads Solutions Group, or any other professionals conducting forensic analysis, where it deems that the additional work is necessary to maximize the recovery of unsecured creditors. The Debtors will pay Fairfax for its services according to its customary hourly rates. The hourly rates charged by Fairfax professionals differ based on, among other things, the individual professional's experience. The customary rates for Fairfax personnel in year 2006 range from $275 to $400 per hour. Fairfax will provide a phased budget, which will contain explicit fee limitations for each phase of its investigation. The Debtors will reimburse Fairfax's out-of-pocket expenses reasonably incurred in connection with services it renders to the Committee. Michael J. Hershman, president of the Fairfax Group, assured the Court that the firm has no connection with the Debtors, their creditors, the U.S. Trustee or any other party in interest in the Chapter 11 cases. Mr. Hershman further assured the Court that Fairfax is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtors' estates with respect to the matters for which it is to be retained. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. The Debtors' exclusive period to file a plan expires on February 18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CUNNINGHAM LINDSEY: DBRS Junks Senior Unsecured Debt's Rating ------------------------------------------------------------- Dominion Bond Rating Service downgraded the senior unsecured debt of the Cunningham Lindsey Group Inc. to CCC from B (low), and has removed it from Under Review with Negative Implications where it has been since Oct. 24, 2006. The trend has been returned to Stable. This action reflects the Company's continuing weak financial performance and high debt ratio, especially given the Company's significant debt maturities in 2008. The Company's earning and cash flow continue to be disappointing, with few near-term prospects for significant improvement. Financial flexibility remains limited. While the latest in a line of new management teams are taking necessary steps to return the Company to profitability, including the 2004 sale of the money-losing U.S. third-party administration business and adopting a stronger focus on divisional profitability, improved performance has yet to be reflected in the financial results. 2006 results to the end of September suggest that improved earnings in the United States have been more than offset by deteriorating performance in Canada, the United Kingdom and Europe. The strength of the Canadian dollar has also put additional downward pressure on reported results. As such, consolidated cash flow remains weak, forcing the Company to borrow from its parent, Fairfax Financial Holdings, to meet its current operating cash flow requirements. Debt service coverage ratios have deteriorated in 2006 despite the reduction in debt levels since 2004. Also pressuring the rating is the over $200 million in debt maturing in 2008, of which $72 million in non-revolving term loans ranks senior to the $125 million in Series B Debentures. Without exhibiting longer term profitability, the refinancing of this debt is very much dependent on the continuing sponsorship of the Company by Fairfax. While DBRS has no reason to suspect that Fairfax will not continue to support the Company, at least in the short run, it is also questionable how long this support can be assumed as part of the rating analysis, given the Company's weak financial performance. DELPHI CORPORATION: Judge Drain Approves SEC Settlement Agreement ----------------------------------------------------------------- The Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has approved Delphi Corporation's settlement agreement with the Securities and Exchange Commission on alleged accounting fraud charges, the Associated Press reports. Judge Drain opines that the SEC settlement is "fair and equitable" and says that the Settlement is in Delphi's best interest, the Associated Press adds. As reported in the Troubled Company Reporter on Oct. 31, 2006, the SEC commenced and simultaneously settled with Delphi a lawsuit alleging violations of federal securities laws. The lawsuit and settlement relate to transactions that were the subject of a restatement by Delphi in June 2005. Under the agreement approved by the Commission, Delphi agreed, without admitting or denying any wrongdoing, to be enjoined from future violations of the securities laws. The SEC did not impose civil monetary penalties against Delphi. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORPORATION: Wants to Amend Fee Structure for Rothschild --------------------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York for permission to amend the fee structure for services provided by Rothschild Inc. as their financial advisor and investment banker, nunc pro tunc to July 19, 2006. John D. Sheehan, vice president and chief restructuring officer of Delphi Corporation, relates that the Debtors' request is in connection with any merger and acquisition transaction involving the Debtors' steering and interior divisions. The Steering Division includes the Debtors' Steering Systems and Halfshafts businesses, while the Interior Division includes the Debtors' Instrument Panels and Consoles, Cockpits, Door Modules, and Latching Systems businesses. The Debtors propose to pay Rothschild these minimum fees for any M&A Transaction involving the Steering Division: (a) $5,000,000, if the M&A Transaction involves both the Debtors' Steering Systems and Halfshafts businesses and is consummated in a single transaction; (b) $3,500,000, if the M&A Transaction involves only the Debtors' Steering Systems business; and (c) $1,500,000, if the M&A Transaction involves only the Debtors' Halfshafts business. On the other hand, the Debtors propose to pay Rothschild these minimum fees for any M&A Transaction involving the Interior Division: (a) $4,000,000, if the M&A Transaction involves all four of the Interior Division business lines in a single transaction; (b) $3,000,000, if the M&A Transaction involves any three of the Interior Division business lines in a single transaction; (c) $2,000,000, if the M&A Transaction involves any two of the Interior Division business lines in a single transaction; and (d) $1,250,000, if the M&A Transaction involves any one of the Interior Division business lines in a single transaction. If the Steering Division, the Interior Division, or any of their respective business lines are sold for amounts exceeding the value implied by the Minimum M&A Fees, the Debtors will pay for Rothschild's services pursuant to the terms of the Original Engagement Letter. Furthermore, if the Debtors decide not to complete an M&A Transaction for the Steering Division or Interior Division as a result of an agreement with the Debtors' stakeholders on a plan of reorganization, the Debtors and Rothschild will agree in good faith at that time on a fee commensurate with Rothschild's services in connection with the contemplated M&A Transactions. In addition to the Minimum M&A Fees, the Debtors will pay for Rothschild's actual expenses incurred while performing services relating to an M&A Transaction. Mr. Sheehan asserts that the proposed fee structure is fair and reasonable in light of the unique circumstances surrounding the terms of sales of the Steering and Interior Divisions. In addition, the proposed M&A Fees will competitively compensate Rothschild for its time and expertise, and adequately incentivize Rothschild to pursue an M&A Transaction. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Orix Vacates Opposition to Lease Decision Extension ---------------------------------------------------------------- Orix Warren, LLC, has vacated its objection to an extension of Delphi Corporation and its debtor-affiliates' deadline to assume or reject the Orix Lease. Orix did not state its reasons for withdrawing its objection. The Debtors are asking the U.S. Bankruptcy Court for the Southern District of New York to extend the Orix Lease decision deadline to June 7, 2007. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, argued that the Debtors satisfy the four factors that the United States Court of Appeals for the Second Circuit has held should be weighed in determining whether cause exists to extend a debtor's deadline to assume or reject an unexpired lease: (1) Whether the debtor was paying for the use of the property; (2) Whether the debtor's continued occupation could damage the lessor beyond the compensation available under the Bankruptcy Code; (3) Whether the lease is the debtor's primary asset; and (4) Whether the debtor has had sufficient time to formulate a plan of reorganization. The Debtors are current on its postpetition lease payments to Orix Warren, LLC, Mr. Butler informed the Court. Moreover, the Debtors have significant resources and liquidity to provide adequate assurance to Orix Warren that it will continue to receive its postpetition rent on time. In addition, the Debtors' continued occupation of the property will not damage Orix Warren beyond the compensation available under the Bankruptcy Code, Mr. Butler asserted. The Orix Lease is currently being used as a research facility for one of the Debtors' core divisions. The Debtors admit that the Orix Lease is not their primary asset. The Orix Lease, however, is a part of the Debtors' real estate portfolio, the evaluation of which is one of the essential components of the Debtors' reorganization efforts, Mr. Butler contended. Furthermore, because of the size of the Debtors' Chapter 11 cases and the complexity of the issues involved in their restructuring, the Debtors have not had sufficient time to make critical decisions regarding all of their leases, Mr. Butler argued. Forcing the Debtors to assume or reject the Orix Lease prematurely could trigger additional administrative claims that would otherwise be general unsecured claims limited by Section 502(b)(6) of the Bankruptcy Code if the Lease will be rejected, Mr. Butler noted. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DURA AUTOMOTIVE: Court Gives Final Nod on Vendor Claims Payment --------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware approved on a final basis DURA Automotive Systems, Inc. and its debtor affiliates request to direct all applicable banks and other financial institutions to receive, process, honor and pay any and all checks and fund transfer requests made by the Debtors related to Critical Vendor Claims or Priority Vendor Claims. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that certain parties supply goods or services critical to the continued operation of the Debtors' business. The Debtors are the sole manufacturers of certain essential component parts and vehicle systems used by major automobile original equipment manufacturers, including Ford Motor Company, General Motors Corporation and DaimlerChrysler Corporation, as well as a number of tier one automotive parts suppliers. If outside suppliers are needed, the Debtors typically contract with one vendor for a particular component and rely on that vendor as their sole source supplier. In general, the Critical Vendors fall into two main categories: (1) The materials vendors supply, among other things, bulk raw materials like coil steel, wire, bulk resins, and flat glass; components and parts directly assembled into the Debtors' products; production materials like welding wire and lubricants; and other materials consumed in the production process. (2) The maintenance vendors provide parts, materials, and services to the Debtors' specialized manufacturing equipment and machinery. Without timely shipments from their sole-source suppliers, the Debtors' manufacturing facilities would lack the requisite goods necessary for their operational needs, and in some instances, could be forced to shut down certain facilities shortly after a missed shipment, Mr. Collins says. By this motion, the Debtors seek the Court's authority to pay the prepetition claims of certain critical vendors and administrative claimholders, subject to these cap amounts: Estimated Interim Final Payables Relief Relief as of 10/26 Sought Sought ----------- ------- ------ Critical Vendor Claims $28,830,384 $9,250,000 $29,000,000 Priority Vendor Claims 24,321,404 9,250,000 25,000,000 Priority Vendors are vendors who sold or transferred goods to the Debtors in the ordinary course of their business during the 20- day period prior to the bankruptcy filing date. Priority Vendor Claims are entitled to administrative expense priority under Section 503(b)(9) of the Bankruptcy Code. The Debtors estimate that the claims of about 500 vendors constitute Critical Vendor Claims. The Debtors also ask the Court to approve a procedure for addressing those vendors who repudiate and refuse to honor their postpetition contractual obligations to the Debtors. Identifying Critical Vendors The Debtors, in conjunction with Glass & Associates, Inc., closely reviewed their accounts payable and prepetition vendor lists and consulted with facility management and others throughout the Debtors' management and purchasing operations to identify those creditors most essential to their operations. The criteria considered included whether: (a) a particular vendor is a "sole-source" provider; (b) certain quality control requirements of the OEMs prevent the Debtors from replacing the vendor; (c) the Debtors currently receive advantageous pricing or other terms from a vendor; and (d) a vendor additionally might face its own liquidity crisis, due to that vendor's operational or cash flow issues, if the Debtors do not immediately pay its prepetition claim. The Debtors also considered whether a vendor would make good on its threat to stop shipping goods and whether an amount less than the full amount of a vendor's claim could induce continuation of shipments. The Debtors propose to condition payment to Critical Vendors and Priority Vendors upon agreement to continue supplying goods and services to the Debtors on terms that are acceptable to the Debtors with an awareness of industry trade terms between the parties. The Debtors reserve the right to negotiate trade terms with any vendor demanding terms less favorable to them. The Debtors seek the Court's authority to enter into Trade Agreements with certain Critical Vendors, if and at the time the Debtors determine in their discretion that the agreement is necessary to their postpetition operations. The Debtors also seek the Court's authority to make payments on account of a Critical/Priority Vendor's claims in the event that no Trade Agreement has been reached, if the Debtors determine, in their business judgment, that failure to pay the Critical/Priority Vendor Claim is likely to result in irreparable harm to their business operations. The Debtors will maintain a matrix summarizing, as of the date of bankruptcy filing: 1. the name of each Critical/Priority Vendor; 2. the amount each Critical/Priority Vendor was been paid on account of its Critical/Priority Vendor Claims; and 3. the goods and/or services provided by each Critical/Priority Vendor. Mr. Collins maintains that the Debtors have anticipated access to sufficient DIP financing to pay all Critical Vendor Claims and Priority Vendor Claims as the amounts become due in the ordinary course of their businesses. Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ELECTRONIC DATA: Promotes Ron Rittenmeyer to President ------------------------------------------------------ EDS Corp. has promoted Ron Rittenmeyer to the position of president, while retaining his current role as chief operating officer. Jeff Heller, who has served as president since returning to EDS in 2003, has been named vice chairman. Both appointments are effective immediately. As president and chief operating officer, Rittenmeyer is responsible for all of EDS' global operations. Heller retains his position on the EDS Board of Directors and as a primary conduit to EDS' client base. "Ron is the primary driver of EDS' operational transformation," said Mike Jordan, chairman and chief executive officer. "Under Ron's direction, we've been able to significantly improve the efficiency, quality and leverage of our global service delivery network and bolster our market competitiveness and sales. Ron's leadership will be critical as we continue to accelerate the pace of change in 2007 and beyond." Jordan added, "Jeff Heller's 38 years of EDS experience continue to be an immeasurable asset as we position the company for future profitable growth. Jeff remains a trusted counselor and partner as we work to ensure our clients remain EDS' singular focus." Before joining EDS in July 2005, Rittenmeyer served as managing director of The Cypress Group, a private equity firm. He was responsible for all operating aspects of the company's $3.5 billion investment portfolio. Previously, Rittenmeyer served as chairman, chief executive officer and president of Safety-Kleen, Inc., a $1.5 billion hazardous and industrial waste management company. At Safety-Kleen, he successfully led the company's reorganization from Chapter 11 bankruptcy protection. A pioneer of the information technology services industry, Heller's career spans nearly four decades with EDS. During this time, he's held numerous senior executive positions, most recently serving as the company's president. Heller joined EDS in 1968 as a systems engineer. Based in Plano, Texas, EDS Corp. (NYSE: EDS) -- http://www.eds.com/-- is a global technology services company delivering business solutions to its clients. EDS founded the information technology outsourcing industry more than 40 years ago. EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. * * * EDS Corp.'s 7-1/8% Notes due 2009 carry Moody's Investors Service's Ba1 rating. EMAGIN CORP: Posts $3.7 Million Net Loss in 2006 Third Quarter -------------------------------------------------------------- eMagin Corp. reported a $3.7 million net loss on $2.3 million of revenues for the third quarter ended Sept. 30, 2006, compared with a $3.8 million net loss on $1.1 million of revenues for the same period in 2005. The increase in revenues is attributable due to increased microdisplay demand and increased availability of finished displays due to manufacturing improvements. This revenue increase was however offset by increases in operating expenses, primarily by the increase in selling, general and administrative expenses of $618,000 related to the stock-based compensation expense of approximately $458,000, and by the increase in interest expense of $353,000. At Sept. 30, 2006, the company's balance sheet showed $8.44 million in total assets and $8.98 million in total liabilities, resulting in a $540,000 total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $6.64 million in total current assets available to pay $7.67 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the third quarter ended Sept. 30, 2006 are available for free at http://researcharchives.com/t/s?1688 Going Concern Doubt As reported in the Troubled Company Reporter on July 27, 2006, Eisner, L.L.P, in New York, raised substantial doubt about eMagin Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's recurring losses from operations, which it believes will continue through 2006. About eMagin Headquartered in Bellevue, Washington, eMagin Corp. (AMEX: EMA) -- http://www.emagin.com-- manufactures and markets virtual imaging products and information technology softwares. In addition, eMagin offers engineering support, as well as various support products, including developer kits and personal computer interface kits. The company offers its products to OEMs in the military, industrial, medical, and consumer market sectors through direct technical sales in North America, Asia, and Europe. ENRON CORPORATION: Wants Defendants' Interlocutory Appeal Denied ---------------------------------------------------------------- Enron Corp. and its debtor-affiliates asks the Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to deny the Bank Defendants' request to file an interlocutory appeal from the Bankruptcy Court's Core Order. Bank defendants Barclays PLC, Citigroup Inc., and Deutsche Bank AG, together with their affiliates, had sought leave to appeal an interlocutory order of the Bankruptcy Court determining that certain claims in the MegaClaim Litigation are "core" claims under 28 U.S.C. Section 157(b)(3). Since the request was filed, plaintiffs Enron Corp. and its debtor-affiliates, reached a settlement with Barclays, pursuant to which Barclays agreed to suspend its participation in the Motion for Leave, subject only to its right to reinstate its participation if the settling parties do not execute a definitive settlement agreement or the Court does not approve the settlement agreement. In light of the Barclays Settlement, the Motion for Leave is now brought on behalf of Citigroup and Deutsche Bank. Enron Wants To Dismiss Bank Defendants' Request H. Lee Godfrey, Esq., at Susman Godfrey LLP, in Houston, Texas, says that interlocutory, piecemeal appeals from bankruptcy court rulings are appropriate only where: (1) the bankruptcy court's order involves a controlling question of law; (2) there is substantial ground for difference of opinion over the Core Order; (3) an immediate appeal would materially advance the ultimate determination of the litigation; and (4) the movant demonstrates that there are "exceptional circumstances" justifying "a departure from the basic policy of postponing appellate review until after the entry of a final judgment." Mr. Godfrey asserts that the Bank Defendants' Motion for Leave satisfies none of the standards, and should therefore be denied. Whether some of the claims in the MegaClaim Litigation are core or non-core claims is not a controlling question of law, Mr. Godfrey says. He also notes that there is no substantial ground for difference of opinion over the Bankruptcy Court's decision. The Bankruptcy Court correctly held that Enron's claims against the Bank Defendants were core claims because the Bank Defendants asserted their proofs of claim in the form of set-offs against Enron's bankruptcy estates, Mr. Godfrey maintains. Furthermore, granting leave to appeal the Bankruptcy Court's Core Order will not materially advance the ultimate determination of the MegaClaim Litigation, Mr. Godfrey notes. The Bank Defendants made two arguments to demonstrate "exceptional circumstances" in their request: (a) If the District Court refuses the appeal, a subsequent court hearing their request to withdraw the reference will be bound by the Bankruptcy Court's finding that Enron's common law claims are core; and (b) That the Bankruptcy Court's Core Order unconstitutionally expands the jurisdiction of the bankruptcy courts. Mr. Godfrey contends that both arguments lack merit. Citing Bianco v. Hoehn (In re Gaston & Snow), 173 B. R. 302, 306 (S.D.N.Y. 1994), Mr. Godfrey notes that the U.S. District Court for the Southern District of New York rejected the argument that failure to appeal a bankruptcy court's determination that a proceeding was core binds a district court's consideration of that element in a later request to withdraw the reference. Even if this were a legitimate concern, Mr. Godfrey says, it does not constitute exceptional circumstances warranting acceptance of the Bank Defendants' appeal. If the District Court finds it appropriate, it can note in its order refusing leave to appeal that the Bankruptcy Court's Core Order is to be considered by the District Court if and when the Bank Defendants seek to withdraw the reference, Mr. Godfrey says. Mr. Godfrey also contends that the Bank Defendants' second argument is incorrect. Citing Statutory Committee of Unsecured Creditors v. Motorola Inc. (In re Iridium Operating LLC), 285 B.R. 822 (S.D.N.Y. 2002), he points out that Courts in the Southern District of New York that have applied the "same transaction" test in determining that common law claims brought by debtors against creditors who file proofs of claim are core claims have considered and rejected the argument. The Bank Defendants pepper their papers with references to their alleged right to have Enron's common law claims tried to a jury and the alleged prejudice to that right if the Bankruptcy Court's ruling is not reversed, Mr. Godfrey relates. The extent to which the Bank Defendants are entitled to a jury trial, if at all, was not placed before the Bankruptcy Court, and thus should not be a factor in the District Court's decision on the Motion for Leave, Mr. Godfrey contends. Should there be any issue of the Bank Defendants' right to jury trial, Enron says it is prepared to demonstrate that the Bank Defendants contractually waived their right to jury trial in accordance with many of the transaction documents between the parties. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen, Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler, Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP, Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L. Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP represent the Debtor. Jeffrey K. Milton, Esq., Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 180 and 183; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENRON CORP: UC Inks Settlement Pacts with Andersen and Kirkland --------------------------------------------------------------- The University of California Board of Regents has reached a $72,500,000 settlement with Arthur Andersen LLP and a $13,500,000 settlement with Kirkland & Ellis LLP in the Enron Corp. securities litigation. Arthur Andersen, former Enron auditor, signed off on many of the company's allegedly false and misleading financial reports. Kirkland & Ellis served as legal counsel for a number of the off- books entities through which Enron was able to manipulate its financial statements. The U.S. District Court for the Southern District of Texas dismissed all of the claims against K&E by order dated Dec. 19, 2002, but that order remained subject to appeal. According to UC, with the latest settlements, it has now obtained more than $7,300,000,000 (including interest) for Enron investors, including: -- $2,400,000,000 from Canadian Imperial Bank of Commerce, -- $2,200,000,000 from JPMorgan Chase, -- $2,000,000,000 from Citigroup, -- $222,500,000 from Lehman Brothers, -- $69,000,000 from Bank of America, -- $168,000,000 from Enron's outside directors, and -- $32,000,000 from Andersen Worldwide. UC will also secure a $37,000,000 distribution for investors through Enron's Chapter 11 proceedings for the LJM2 partnership involved in the Enron scheme. Remaining defendants in the investors' lawsuit include former officers of Enron, the law firm of Vinson & Elkins and a number of major financial institutions that allegedly set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated phony sales of phantom Enron assets. As a result, Enron executives were allegedly able to deceive investors by reporting increased cash flow from operations and by moving billions of dollars of debt off Enron's balance sheet, thereby artificially inflating securities prices. In February 2002, UC was named lead plaintiff in the Enron shareholders' class action suit previously filed against top executives of Enron and Arthur Andersen. The university filed a consolidated complaint on April 8, 2002, adding nine banks and two law firms as defendants in the case. In April 2003, the Honorable Melinda Harmon of the U.S. District Court for the Southern District of Texas completed her rulings on the various defendants' motions to dismiss and lifted the stay on discovery. Following those rulings, UC filed an amended complaint on May 14, 2003. Other institutional investors acting as representative plaintiffs on behalf of Enron investors include Washington State Investment Board, the Amalgamated Bank and its Long View Funds, San Francisco City and County Employees' Retirement System, Employer- Teamsters Local Nos. 175 & 505 Pension Trust Fund, Hawaii Laborers Pension Plan, Greenville Plumbers Pension Plan, and Archdiocese of Milwaukee. Trial in the case is slated to begin in Houston, Texas, on April 9, 2007. Enron's Former Lenders Oppose Andersen Settlement Merrill Lynch & Co. and Credit Suisse Group asked Judge Harmon to reject the $72,500,000 settlement agreement between Enron Corp.'s investors and Arthur Andersen LLP, Jef Feeley of Bloomberg News reports. The two former Enron lenders asserted that the Andersen Settlement allows an obvious wrongdoer to get out of the case too cheaply, Bloomberg says. The two banks were also sued by Enron shareholders over the company's financial collapse. According to Bloomberg, counsel for the two banks contend that the Andersen Settlement is flawed because it contains a provision that declares it void if Enron investors end up having jurors decide their claims against the company's former lenders. The Banks' lawyers tell the Court that the danger of jury confusion is obvious and denies the financial institution defendants a fair trial. The University of California Board of Regents, however, says that the Andersen Settlement is reasonable, considering the accounting firm's condition. The regents serve as lead plaintiff in the Enron securities litigation because the institution lost $145,000,000 in Enron's bankruptcy filing. "This is a fair resolution given what we could have reasonably expected to recover from Andersen at this point," U.C. Board of Regents spokesman Trey Davis said. Andersen has shut down its auditing practice after it was convicted in 2002 of obstructing a federal investigation into the firm's review of Enron's books. About Enron Corp. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen, Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler, Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP, Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L. Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP represent the Debtor. Jeffrey K. Milton, Esq., Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 180 and 183; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW ORLEANS: Panel Wants Exclusivity Periods Terminated --------------------------------------------------------------- The Official Committee of Unsecured Creditors in Entergy New Orleans Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to terminate the exclusive periods within which Entergy New Orleans, Inc., may file and solicit acceptances to its proposed plan of reorganization pursuant to Section 1121(d) of the Bankruptcy Code. Philip K. Jones, at Liskow & Lewis, APLC, in New Orleans, Louisiana, asserts that ENOI's First Amended Plan filed on Nov. 14, 2006, is both unacceptable to the Committee and unconfirmable as a matter of law because it fails to pay unsecured claims postpetition interest while preserving ENOI's stated equity of more than $170,000,000 held by Entergy Corporation. Any statement that the Proposed Plan will "fully compensate the creditors" misrepresents the Proposed Plan, Mr. Jones says. Mr. Jones notes that without payment of postpetition interest, the unsecured creditors are impaired under Section 1124 of the Bankruptcy Code, a treatment that the Committee opposes. He maintains that unless a solvent debtor like ENOI pays postpetition interest, the debtor cannot satisfy the "fair and equitable" test of Section 1129(b)(2) and the absolute priority rule of Section 1129(a)(7)(A)(ii). The Committee also objects to certain conditions set by ENOI for its Proposed Plan to become effective, specifically: (1) ENOI will have received in cash at least $200,000,000 in Community Development Block Grant Funds, and at least $50,000,000 in Katrina Insurance Proceeds, and; (2) No Material Adverse Change will have occurred from and after the Confirmation Date. The Committee says the conditions are unacceptable and make the Proposed Plan unconfirmable. Any conditions relating to ENOI's receipt of CDBG Funds or insurance proceeds are unnecessary to confirming and consummating a plan, the Committee asserts. Mr. Jones points out that although the Proposed Plan purports to set an effective date of June 30, 2007, there is little to no assurance that the conditions will be satisfied by that date or that ENOI will not seek multiple extensions of the June 30 deadline as provided for under a provision in the Proposed Plan. The Committee further objects to another Proposed Plan provision that states that if the plan does not become effective by June 30, 2007, "the Confirmation Order shall be vacated, no distributions under the Plans shall be made and the Debtor and all Holders of Claims and Interest shall be restored to status quo ante . . ." Mr. Jones says the provision is unacceptable to the Committee because there is no justification for the situation to arise, as it is within ENOI's ability to obtain funds to consummate a plan prior to June 30, 2007. The Committee also adopts the reasons and arguments presented by Financial Guaranty Insurance Company in its own request to terminate ENOI's exclusive period. Mr. Jones asserts that termination of ENOI's exclusive periods will allow the Committee to actively seek exit financing and propose and confirm a Chapter 11 Plan without unacceptable conditions as prerequisites to the Effective Date. The Committee believes, and is prepared to demonstrate, that a confirmable plan is now possible and could become effective by March 31, 2007. Thus, the Committee also seeks the Court's authority to file and solicit acceptances for its proposed alternative plan. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW ORLEANS: Sells Market Street Asset for $10 Million -------------------------------------------------------------- Entergy New Orleans, Inc., seeks the U.S. Bankruptcy Court for the Eastern District of Louisiana's consent to sell certain property and improvements commonly referred to as the Market Street Property, free and clear of all liens, encumbrances, and adverse claims to Market Street Properties, LLC. The Market Street Property is the site of a facility known as the Market Street Power Plant, which was decommissioned by ENOI in 1973. It is also the site of an active 115 kV electrical substation and a 13 kV electrical distribution facility, as well as an active electrical transmission and distribution lines. With the exception of the Substation and the Electric Lines, ENOI has not employed any of the improvements on the Property in 33 years. According to Tara G. Richard, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., in New Orleans, Louisiana, ENOI and Market Street Properties have been negotiating for the Property's sale for several months, and have now reached an agreement. The Purchase Agreement provides that: (1) ENOI will grant a pre-dial servitude of view encumbering certain of its adjacent property which will restrict its use of air space over the adjacent property; (2) the property to be sold to Market Street will include the immovable property and all improvements on it, except for various conductors, transformers, cross arms, cables, conduits, and related facilities constituting the Substation, the Electric Lines and any other portion of ENOI's electrical or gas transmission or distribution system or any attachments located on the Market Street Property; (3) Market Street will pay $10,000,000 in cash to ENOI at closing of the transaction; (4) Market Street will pay the entire cost of relocating the Substation and certain other active electrical transmission and distribution lines that are located on the Property; (5) Market Street will release ENOI from all claims of any type with respect to adverse environmental conditions at the Property, and it will be responsible for environmental remedial efforts on the Property; (6) the Property is being sold "as is, where is," and "with all faults" and ENOI will give no warranty to Market Street, provided, however, that it is a condition of closing that the Court approves the sale and expresses that the sale is being made free and clear of all liens, encumbrances and adverse claims; (7) Market Street will pay all closing costs, except for ENOI's attorneys' fees and related expenses; and (8) Market Street and ENOI will execute the "Substation Servitude" and the "Utility Line Servitude" under the Purchase Agreement, under which: (a) the Substation Servitude will grant to ENOI exclusive use of the property on which the Substation is located and use of and access to certain other parts of the Property until the Substation has been relocated at Market Street's cost; and (b) the Utility Line Servitude grants ENOI the right to continue to operate, maintain, repair and replace any electrical transmission and distribution lines located at the Property until the facilities have been relocated at Market Street's cost. The Servitude further limits Market Street's use of certain improvements at the Property until the relocation of the transmission lines that are attached to the improvements. ENOI further asks the Court for authority to execute and perform its obligations under the Agreement for Purchase and Sale of Real Estate, Memorandum of Understanding and Environmental Release and Indemnity Agreement with Market Street. Ms. Richard says there is a possibility that the Property contains adverse environmental conditions that represent a potentially material contingent liability of ENOI. Thus, selling the Property is in the best interest of ENOI's estate since Market Street will assume all liabilities and will defend, indemnify, and hold ENOI harmless with respect to the liabilities. Furthermore, Ms. Richard relates, the proposed purchase price substantially exceeds the appraised value of the Property. The most recent appraisal of the Property values it at $8,000,000. Market Street has advised ENOI that it will not proceed with the transaction if the sale is unable to close by December 31, 2006, because the financing it obtained may not be available after that date. Ms. Richard assures the Court that the proposed transaction will not impair ENOI's ability to propose a confirmable Chapter 11 Plan. On the contrary, the proceeds and other consideration to be received by ENOI from the sale will substantially reduce its actual and contingent liabilities, and contribute to its prospects for a successful reorganization. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FAIRFAX FINANCIAL: Improved Liquidity Cues Moody's Stable Outlook ----------------------------------------------------------------- Moody's Investors Service changed the rating outlook for Fairfax Financial Holdings Ltd.'s Ba3 senior debt rating and TIG Capital Trust I's B2 preferred stock rating to stable from negative. At the same time, Moody's affirmed each entity's ratings. Moody's said the change in outlook reflects the improved liquidity position at the holding company and within FFH's run-off operations. FFH's cash position at the holding company has remained above Moody's expectations for the balance of 2006 because its run-off operations have drained less cash from it than in prior years. Moreover, the company's earlier decision to commute a large adverse development contract freed up funds in the run-off businesses and should prevent further cash drain at the holding company for at least the next two years. Finally, FFH recently disclosed the completion of a public secondary offering of its majority-owned subsidiary, Odyssey Re Holdings Corp., which will net the company an additional $300 million in cash. As a result, FFH will have over $700 million in cash at the holding company level, well in excess of the rating agency's $400 million expectation. Moody's also noted that the improved liquidity conditions at FFH help alleviate the concerns it highlighted in its earlier decision to maintain the negative outlook on the company. On July 31, 2006, Moody's cited concerns about the emergence of material weaknesses in FFH's control environment, the potential for further financial restatements, and the possibility of enhanced regulatory scrutiny and/or fines as the basis for maintaining a negative outlook on the company. In Moody's view, these concerns, though still present in the overall credit profile, no longer warrant a negative outlook. Most importantly, the additional cash at the holding company gives FFH additional cushion to absorb any negative consequences triggered by the aforementioned issues. In addition, the company has taken meaningful steps to remediate its material weaknesses and has provided evidence that suggests its recent financial restatements were largely due to flaws in a now-replaced accounting system used prior to 2001. Finally, although the company remains under investigation by the U.S. Securities and Exchange Commission, Moody's is growing more comfortable that any adverse regulatory developments will be manageable within FFH's current rating. The decision to change the outlook on TIGCT to stable from negative is based on improved operating performance at the TIG Insurance Company, as well as FFH's improved liquidity position discussed above. The rating agency said that FFH's Ba3 rating is based on these expectations: -- holding company cash remains at or above $400 million; -- pre-tax coverage of interest, hybrid fixed payments, and preferred share dividends remains above 1x; -- financial leverage continues to improve moderately with hybrid-adjusted debt to total capital staying below 45%; -- only moderate adverse reserve development after reinsurance with run-off operations operating at or near break-even; and' -- any internal or external investigations into finite transactions or other accounting issues do not result in further material negative impact on FFH's common equity. Fairfax Financial Holdings, based in Toronto, Ontario, is a financial services holding company with subsidiaries engaged in property and liability insurance and reinsurance in Canada, the United States, and internationally. For 2006 year-to-date, Fairfax Financial reported total revenue of $5.2 billion, net income of $68.4 million, and shareholders' equity of $2.7 billion. These ratings were affirmed with the outlook changed to stable from negative: * Fairfax Financial Holdings Ltd. --- senior debt at Ba3; * TIG Capital Trust I -- backed preferred stock at B2. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations. FALCON AIR: Sells 100% Shares to Icon International for $4.2 Mil. ----------------------------------------------------------------- The Chapter 11 Trustee appointed in the bankruptcy case of Falcon Air Express Inc. has reached an agreement with Icon International Holdings Inc. to purchase the stock of Falcon under a Stock Issuance and Plan Funding Agreement. The agreement provides for Icon to control 100% of the outstanding shares of the Reorganized Falcon. Icon will pay $4,200,000 for the acquisition. Three million ($3,000,000) in cash at closing and issue common shares under Section 1145 of the Bankruptcy Code valued at $1,200,000, these shares will be liquidated under a Leak-Out Agreement at the rate of $100,000 per month for a twelve month period. As part of the acquisition Icon will acquire all parts, furniture and fixtures, contracts and licenses of Falcon. The agreement provides for the confirmation of the plan and closing in January of 2007. Headquartered in Miami, Florida, Falcon Air Express Inc. -- http://www.falconairexpress.net/-- is a small and low-cost airline company that provides charter service and renders foreign and U.S. carriers sub-services on schedules routes. The Debtor and its affiliate, MAJEL Aircraft Leasing Corp., filed for chapter 11 protection on May 10, 2006 (Bankr. S.D. Fla. Case Nos. 06-11877 & 06-11878). Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. Peter D. Russin, Esq., and Michael S. Budwick, Esq., at Meland Russin & Budwick, P.A., represent the Official Committee of Unsecured Creditors. On June 26, 2006, Kenneth A. Welt was appointed as the Debtor's Chapter 11 Trustee. Ariel Rodriguez, Esq., and Frank P. Terzo, Esq., at Katz Barron Squitero Faust represents the Chapter 11 Trustee. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. FLOWSERVE CORP: Opens New Quick Response Center in Germany ---------------------------------------------------------- Flowserve Corp. has opened the new administrative headquarters for its Flow Solutions Europe, Middle East, and Africa operations. Located in Essen, Germany, the facility houses a Quick Response Center that provides local sales, service, support and manufacturing of seals and associated products, and a Learning Resource Center that offers best-practices maintenance training programs for pumps and seals for employees and customers. The Essen QRC provides Flowserve customers with local access to spare parts inventory, repair, quick turnaround manufacturing, CAD design, and technical services for sealing requirements. The QRC also manufactures pump seals, mixer seals, and piston rod packing rings for large reciprocating compressors, which are widely used in chemical refining and manufacturing applications. The LRC specializes in hands-on training in pumps, valves, and seals for engineers, operators, craftsmen, and other plant professionals. Experienced instructors teach OEM-standard procedures through a combination of classroom instruction and hands-on experience in state-of-the-art static and power labs. The Essen LRC cross-trains with other Flowserve facilities in the United States, Saudi Arabia, and Singapore, as well as university and government sites around the world, to provide education on the most modern and consistent installation and maintenance practices. In addition to supporting active OEM customers in Germany and providing faster service and support to end user customers, the Flowserve Essen facility provides direct, local access to the company's LifeCycle Advantage equipment management program. Easy access to LCA technical consultants, replacement parts, and extensive service and repair offerings enable participating customers to streamline inventory, reduce product life cycle costs, and extend equipment life. "With the opening of the Essen facility, Flowserve continues its promise to support customers throughout the life of their equipment - from spare parts to maintenance to training," said Andy Beall, president, Flowserve Flow Solutions. "Our growing network of QRCs and learning centers provide Flowserve customers with consistent, outstanding service, across the board and around the world." About Flowserve Corp Headquartered in Irving, Texas, Flowserve Corp. (NYSE: FLS) -- http://www.flowserve.com/-- provides fluid motion and control products and services. Operating in 56 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. * * * As reported in the Troubled Company Reporter on Oct. 9, 2006, Standard & Poor's Ratings Services raised its short-term rating on Flowserve Corp. to 'B-2' from 'B-3'. All other ratings on the Irving, Texas-based engineered pumps manufacturer, including its 'BB-' long-term corporate credit rating, were affirmed. The outlook is stable. In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. manufacturing sector, the rating agency revised the Corporate Family Rating for Flowserve Corp. to B1 from Ba3, as well as the ratings on the company's US$400 million revolver due 2010 and the US$600 million term loan due 2012 to Ba2 from Ba3. These debentures were assigned an LGD3 rating suggesting that creditors will experience a 41% loss in the event of a default. FOAMEX INTERNATIONAL: Names Stephen Markert as Interim CFO ---------------------------------------------------------- Foamex International Inc. has named Stephen E. Markert, Jr., as interim chief financial officer, effective immediately. Mr. Markert will report to Raymond E. Mabus, Jr., chairman and chief executive officer of Foamex International. "We are extremely pleased to have Steve join us in this capacity" Mr. Mabus stated. "Steve is a seasoned financial executive whose broad-based finance, accounting, administration, and strategic planning experience will be extremely beneficial as we prepare to emerge from bankruptcy protection." Foamex is engaging global executive search firm Spencer Stuart to assist in its search for a permanent chief financial officer. The company will examine both internal and external candidates. Mr. Markert, 55, has more than 30 years of financial experience. He comes to the Company from Tatum LLC, an executive services firm, where he is a Partner. Most recently, Mr. Markert was responsible for consolidating accounting functions and implementing standard procedures and reporting processes for a local publicly traded corporation with multinational operations. Prior to that, Mr. Markert served as Vice President Finance, Chief Financial Officer at C&D Technologies, Inc. from 1995 to 2005, where he directed a multi-national finance and IT staff, managed financial information and guidance, the investor relations function and the sale of several company facilities. He served as C&D's Corporate Controller from 1989 to 1995. From 1981 to 1989, Mr. Markert held various positions of increasing responsibility at Decision Data Computer Corporation. Mr. Markert is a CPA and has received an M.B.A. from LaSalle University and a B.S. from LaSalle College. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. FOAMEX INTERNATIONAL: Court OKs Cure Amount Determination Protocol ------------------------------------------------------------------ The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware approves Foamex International Inc. and its debtor- affiliates' request to establish: (i) a procedure for determining cure amounts; and (ii) a deadline for objections relating to contracts and leases that may be assumed pursuant to the Plan. As reported in the Troubled Company Reporter on Nov. 10, 2006, under the Debtors' Amended Joint Plan of Reorganization, certain executory contracts and unexpired leases will be assumed as of, and subject to, the effective date of the Plan, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates. The Amended Plan and Section 365(b) of the Bankruptcy Code require the Debtors to cure or provide adequate assurance that they will promptly cure existing defaults under that executory contracts and unexpired leases. The non-debtor parties to the Subject Contracts will have 21 days after service of the Cure Notice to object to the: (a) Cure Amounts listed by the Debtors and propose alternative cure amounts; or (b) proposed assumption of the Subject Contracts under the Amended Plan. If a Cure Objection is timely filed and the parties are unable to settle it, the Court will determine the amount of any disputed Cure Amount, or objection to assumption, at the hearing to be held on Jan. 18, 2007. The Debtors agree that, subject to the confirmation of their Second Amended Plan of Reorganization and the Effective Date, the secured claim of Commercial Roofing System, Inc., to the extent allowed, will be paid in cash in accordance with the Second Amended Plan. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX LP: Moody's Junks Rating on $190 Mil. 2nd Lien Senior Loan ----------------------------------------------------------------- Moody's Investors Service assigned Foamex L.P. B2 corporate family and probability of default ratings. Concurrently, Moody's assigned a B1 rating to the company's $425 million first lien senior secured Term Loan B and a Caa1 rating to its $190 million second lien senior secured term loan. The ratings outlook is stable. Assignments: * Issuer: Foamex L.P. -- Senior Secured Bank Credit Facility, Assigned a range of 37 - LGD3 to B1 -- Senior Secured Bank Credit Facility, Assigned a range of 84 - LGD5 to Caa1 Outlook Actions: * Issuer: Foamex L.P. -- Outlook, Changed To Stable From Rating Withdrawn A somewhat levered capital structure, raw materials cost volatility, and industry cyclicality among many of the company's end customers characterize Foamex's B2 corporate family rating. The rating also reflects the company's strong position in its industry, increased end market diversification, and a business strategy less focused on driving market share growth and more on improving profitability. The B2 corporate family rating recognizes Foamex's recent operational improvements, a new management team focused on profitable growth, and recent price rationalization. While Moody's believes that the company's favorable forward- looking credit metrics could support a higher corporate family rating, Moody's remains concerned that Foamex still faces many of the same dynamics that drove it to file for Chapter 11 protection in 2005. Moody's believes that Foamex remains highly exposed to raw material price fluctuations and the highly volatile domestic auto industry. In particular, polyol prices have increased over 100% since January 2004. While worldwide production capacity for polyol exceeds consumption, it is the limited supply for one of polyol's key components, propylene oxide, which has driven polyol prices to record levels. Additionally, Moody's notes that two of Foamex's indirect end customers, Ford and General Motors, are under financial stress, are losing market share to foreign manufacturers, and have B3 corporate family ratings with negative ratings outlooks. The company expects to emerge from bankruptcy in Q1'07 and as soon as February 2007. As part of its emergence plan, Foamex is pursuing a recapitalization of its balance sheet that will include an infusion of new equity. Foamex intends to finance the repayment at emergence of debtor-in- possession revolver outstandings, DIP term loan and one series of senior secured second lien notes and two series of senior subordinated notes, principal and accrued interest, with a first and second lien term loan, asset-based revolver, and $150 million in new equity raised via a rights offering. The stable ratings outlook reflects Foamex's relatively conservative capital structure at the B2 rating level and its strong market position in most niches in which it competes. Additionally the stable outlook reflects an improved cost structure and price leadership, both of which have lead to margin improvement and increased free cash flow. Moody's believes that Foamex will need to deliver on our cash flow and capital structure expectations before the B2 corporate family rating would be under positive rating pressure. More specifically, Moody's could consider a rating upgrade if total debt-to-EBITDA was to drop below 3.5 times and free cash flow-to- debt was to exceed 7% for a sustained period. Moody's could downgrade the corporate family rating due to deteriorating liquidity or if free cash flow becomes negative thus forestalling Foamex's maintenance of an increasingly conservative capital structure. Foamex L.P., based in Linwood, Pennsylvania, is the largest manufacturer and distributor of flexible polyurethane and advanced polymer foam products in North America. The company reported LTM revenues of $1.39 billion. FOAMEX LP: S&P Junks Rating on $175 Mil. Senior Secured Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Foamex L.P.'s proposed $425 million senior secured term loan B, based on preliminary terms and conditions. At the same time, Standard & Poor's assigned a '2' recovery rating, indicating the likelihood of a substantial recovery of principal in the event of a payment default. Standard & Poor's also assigned a 'CCC+' rating to the proposed $175 million senior secured second-lien credit facility, based on preliminary terms and conditions. Standard & Poor's assigned a '5' recovery rating to the senior secured second-lien credit facility, indicating the likelihood of a negligible recovery of principal in the event of a payment default. The bank loan ratings assume that other conditions precedent to the bank facility becoming effective are satisfied; the ratings are subject to review once final documentation is received. "We expect to assign a 'B' corporate credit rating to the company if Foamex and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in February 2007 as currently planned," said Standard & Poor's credit analyst Robyn Shapiro. "Also, we expect the outlook to be stable." Proceeds of about $640 million from debt financing and $150 million from a rights offering will be used toward paying pre-bankruptcy liabilities. Pro forma total adjusted debt at emergence is expected to be about $720 million. Standard & Poor's adjusts debt to include capitalized operating leases and tax-effected underfunded pension and other postretirement obligations. Foamex entered voluntary bankruptcy protection on Sept. 19, 2005, prompted by the company's high leverage combined with a material decline in operating performance. Operating performance had deteriorated because of a significant price increase in the company's raw materials combined with a bond maturity, lack of liquidity, and a downturn in one of the company's primary end markets, the automotive industry. However, increased operating efficiencies resulting from restructuring initiatives and price increases implemented by management after entering Chapter 11 bankruptcy protection, have led to a meaningful improvement in operating results over the last 12 months. Sustained improvement in operating performance despite potential softening end markets, including housing and automotive, along with strengthening credit ratios would provide upside potential for the prospective rating over the intermediate term. The ratings are based on the exit financing, capital structure, and other terms and conditions proposed under the company's second amended joint plan of reorganization for Foamex and its affiliated debtors and debtors-in-possession filed with the bankruptcy court on Nov. 27, 2006. Any material changes in the final plan of reorganization or significant delays in the emergence process could result in different ratings. The anticipated 'B' corporate credit rating on Foamex reflects the company's exposure to volatility in raw material prices and economic cycles, customer concentration, pricing and volumes vulnerable to weak automotive fundamentals in North America, and a highly leveraged capital structure. The rating also reflects the company's leading market share and manageable debt maturity schedule. Linwood, Pennsylvania-based Foamex, with 2005 revenue of about $1.3 billion, is a manufacturer and distributor of flexible polyurethane and advanced polymer foam products, focused mainly on North America. FREESCALE SEMICON: S&P Pares Corp. Credit Rating to BB- from BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Freescale Semiconductor Inc. to 'BB-' from 'BB+' and removed the rating from CreditWatch with negative implications, where it had been placed on Sept. 11, 2006, after the company's disclosure that it was considering a business transaction, later confirmed as a leveraged buyout. The outlook is negative. At the same time, Standard & Poor's assigned its term loan and recovery ratings to Freescale Semiconductor's $4.25 billion senior secured bank facility. The facility consists of a $3.5 billion senior secured term loan and a $750 million revolving credit agreement. The term loan and credit facility are rated 'BB', one notch higher than the corporate credit rating, with a recovery rating of '1', indicating an expectation of a full recovery of principal in the event of a payment default. "The rating actions reflect the company's LBO, which has materially increased debt leverage while substantially reducing liquidity and free cash flows," said Standard & Poor's credit analyst Bruce Hyman. The ratings on Freescale reflect the company's near-investment grade business profile, balancing a leverage profile that is high for the rating level. The business profile reflects the company's strong position in its industry, offset by substantial customer concentration in a cyclical, capital-intensive marketplace. Debt leverage is high, about 5.6x trailing four quarters' adjusted EBITDA, with an adequate initial cash balance of about $600 million. Freescale is a major supplier to the networking, wireless, and automotive semiconductor markets. Most design wins are long- lived, while the large software content in its products creates high switching costs for its customers, and substantial barriers to entry. However, these markets have experienced substantial volatility in the past, which could recur, and market shares-- particularly in the wireless handset market--could still fluctuate materially. Post-LBO leverage is high for the rating, and is likely to remain so over at least the next one to two years. Standard & Poor's anticipate that market conditions will be good over the intermediate term and that sales and profitability growth could lead to leverage more in line with the rating. However, industry cycles and market conditions are unpredictable, and if the expected deleveraging does not take place, the ratings could be lowered in the interim. A stable outlook would require substantial reduction in leverage levels, which is not anticipated within the next one to two years. GE CAPITAL: Consistent Losses Prompt Fitch's Junk Ratings --------------------------------------------------------- Fitch Ratings has taken rating actions on GE Capital's home equity loan pass-through certificates: Series 1997-HE1 -- Classes A4, A5 affirmed at 'AAA'; -- Class M affirmed at 'BBB'; -- Class B1 remains at 'C/DR5'. Series 1997-HE3 -- Classes A5, A6 affirmed at 'AAA'; -- Class M downgraded to 'A' from 'AA'; -- Class B1 downgraded to 'C/DR4' from 'CC/DR4'. Series 1998-HE1 -- Classes A6, A7 affirmed at 'AAA'; Series 1998-HE2 -- Classes A6, A7 affirmed at 'AAA'; Series 1999-HE1 -- Classes A6, A7 affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B1 downgraded to 'BBB' from 'A'; -- Class B2 downgraded to 'C/DR3' from 'CC/DR3'. Series 1999-HE2 -- Classes A5, A6 affirmed at 'AAA'; Series 1999-HE3 -- Classes A5, A6 affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'BBB'; -- Class B3 downgraded to 'C/DR3' from 'CC/DR4'. The affirmations, affecting $77.1 million of outstanding certificates, are due to stable collateral performance and moderate growth in credit enhancement. The downgrades, affecting approximately $20.80 million of the outstanding certificates, reflect the deterioration of credit enhancement relative to consistent or rising monthly losses. As of the October 2006 distribution date, the transactions are seasoned from 85 to 115 months. The pool factors range approximately from 5% to 6%. The series 1997-HE3 has been experiencing monthly loss of about $40,000 on average. As a result, the class B2 has been entirely written down. At the current rate of loss, the class B1 bond ($1.6 million) will be entirely written down in about 38 months, at which time the class M will begin taking losses. As of the October 2006 distribution, the 60+ delinquencies represent 12.05% of the mortgage pool, foreclosures and REO represent 3.45% and 2.58%, respectively. Fitch is downgrading two bonds from the series 1999-HE1 transaction: -- the most subordinate B2 bond from 'CC' to 'C'; and, -- the B1 bond from 'A' to 'BBB'. The B2 bond is currently being written down as a result of monthly losses. Over the past three months, the average monthly loss has been $128,000. At this rate, the B2 bond ($4.56 million), which provides the B1 bond with 11.7% credit enhancement, will be entirely written down in about 36 months. Once the B2 bond is gone, the B1 bond will begin taking losses. 60+ day delinquencies are at a recent program high of 25%, a portion of which comprises foreclosures and REO which represent 6.5% of the portfolio. Fitch is downgrading one bond from the series 1999-HE3 transaction: -- the most subordinate B3 bond from 'CC' to 'C'. The B4 bond which provided CE for the B3 bond has been depleted. The three month average monthly loss has been about $30,000. At this rate, the B2 bond ($6.2 million), which provides the B1 bond with 9.9% credit enhancement, will be entirely written down in about 39 months. The 60+ delinquencies represent 25.41% of the mortgage pool, foreclosures and REO represent 4.17% and 0.99%, respectively. The mortgage loans consist of fixed- and adjustable-rate, closed- end home equity mortgage loans, secured by residential properties which have original terms to maturity of 15 or 30 years. Fitch's Distressed Recovery ratings, introduced in April 2006 across all sectors of structured finance, are designed to estimate recoveries on a forward-looking basis while taking into account the time value of money. GEOKINETICS INC: Moody's Rates $100 Mil. Senior Sec. Notes at B3 ---------------------------------------------------------------- Moody's Investors Service assigned a B3 corporate family rating and probability of default rating to Geokinetics Inc., and an SGL-3 speculative liquidity rating. Moody's also assigned a B3, LGD4 rating to Geokinetics' proposed offering of $100 million second priority senior secured floating rate notes due 2012. The outlook is stable. Proceeds from the notes will be used to retire an existing $100 million senior loan. Simultaneously with the closing of the notes offering, Geokinetics will retire a $55 million subordinated loan with the proceeds of the sale of convertible preferred stock. Furthermore, the company plans to enter into a new $30 million senior secured first lien bank credit facility to replace its existing $12 million senior secured revolver. The bank facility will consist of a $20 million revolver and a $10 million capital expenditure facility. The assigned ratings assume these transactions occur as expected and are subject to a review of the final documents and terms. The SGL-3 liquidity rating indicates adequate liquidity over the next four quarters from a combination of up-cycle cash flow, available bank borrowing capacity under the proposed facility, and good covenant coverage; offset by the volatile nature of the seismic sector where EBITDA can rapidly decline in market downturns. "The B3 rating primarily reflects Geokinetics high leverage and small scale combined with operating in the seismic sector, arguably the most cyclical and competitive sector in oilfield services," commented Pete Speer, Moody's Vice-President/Senior Analyst. Geokinetics: -- has total assets of $269 million at Sept. 30, 2006, compared to much larger and better capitalized seismic competitors like Western GECO, CGG/Veritas and PGS; -- high leverage even with the preferred stock which will be subordinate to the notes but mandatorily redeemable in 2014, and therefore Moody's treats the preferred as being 75% debt and 25% equity; -- the inherent challenges and risks of integrating the Trace Energy and Grant Geophysical acquisitions that have more than tripled its size in less than a year; and, -- the extreme cyclicality of the seismic business, which historically has been the last to benefit when market conditions strengthen and the first to decline when the market weakens. Both legacy Geokinetics and Grant have undergone debt restructurings in 2003, highlighting the challenges faced in this sector of oilfield services. The ratings are supported by Geokinetics' substantial market position in land and transition zone focused seismic data acquisition services, where the company believes it is currently the third largest player worldwide. The September 2006 acquisition of Grant strengthened Geokinetics' business profile by diversifying the company into international markets, balancing its portfolio with more exposure to oil E&P activity and providing increased size. Grant's international operations bring relationships with national oil company's, who tend to plan longer term and are less commodity price sensitive in their E&P activities, enhancing stability albeit with increased political risks. The ratings and stable outlook are also supported by a $324 million committed backlog that provides strong visibility through 2007 and Moody's expectation that market conditions will remain supportive, although they may soften in the latter half of 2007 depending on commodity prices. Moody's notes that customers can cancel seismic contracts with only minor penalties, so the backlog supports but does not lock in future cash flows and profitability. Geokinetics has full leverage for the B3 rating, and Moody's believes that the company's capital structure does not provide much room to weather the cyclical nature of the business. Therefore there is limited near term upside in the rating. Management is contemplating issuing equity in 2007, which would provide additional funding for planned growth capital expenditures and/or a possible redemption of a portion of the notes. If the equity offering exceeds $75 million and $35.00 per share, the company can force conversion of the preferred stock into common, further improving its financial leverage. The issuance of equity with a meaningful reduction in debt would strengthen the company within the present rating and provide more flexibility in the event of weaker market conditions. Ratings could be pressured if Geokinetics were to increase its leverage through debt funded acquisitions and/or aggressive growth capital expenditures. Although the bank credit facility, notes and preferred stock mature in five years or more, a significant deterioration in market conditions could dramatically decrease EBITDA and cash flows. Under that scenario, Geokinetics could possibly violate credit facility debt covenants and face other difficulties that could result in a negative outlook or rating downgrade. Geokinetics Inc., headquartered in Houston, Texas, is a global provider of land based and transition zone seismic data acquisition and processing services for oil and gas exploration and production companies and seismic data library companies. GEOKINETICS INC: S&P Junks Rating on $175 Million Senior Facility ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Houston, Texas-based seismic company Geokinetics Inc. At the same time, Standard & Poor's assigned its 'CCC+' rating and '3' recovery rating to Geokinetics' $175 million senior secured second-lien credit facility. Proceeds from the note offering will be used to refinance existing debt raised fund the company's recent acquisition of seismic provider Grant Geophysical Inc. in September 2006. Pro forma for the transaction, Geokinetics will have $163 million in adjusted debt. "The ratings on Geokinetics reflect participation in the historically cyclical land seismic acquisition business, an acquisitive growth strategy, and a highly leveraged financial risk profile," said Standard & Poor's credit analyst Jeffrey B. Morrison. "More specifically, the ratings incorporate our concerns regarding cash flow durability through the oil and gas spending cycle despite a favorable near-term industry outlook," said Mr. Morrison. GLOBAL POWER: Closes $85 Million DIP Financing Credit Facility -------------------------------------------------------------- Global Power Equipment Group Inc. closed on its $85 million in debtor-in-possession credit facility from Morgan Stanley Senior Funding Inc., which had provided the company with a preliminary commitment on Nov. 21, 2006. As reported in the Troubled Company Reporter on Nov. 22, 2006, Global Power will apply the proceeds of the new DIP credit facility to refinance Global Power's existing senior secured revolving debt and term loan, as well as its previously announced interim DIP credit facility of $10 million arranged by Bank of America. In addition, the company will use the new DIP credit facility as additional liquidity in support of ordinary course business operations. "Our receipt of this new credit facility constitutes a significant milestone that Global Power has achieved as we focus on moving forward as expeditiously as possible in our reorganization process," John Matheson, President and Chief Executive Officer of Global Power, said. "Going forward, we will continue to concentrate on serving our customers and positioning the Company across our key markets." "We are pleased with our new DIP credit facility, which will help provide us with adequate levels of financing to stabilize our operations and meet customer needs," Michael Hanson, Chief Financial Officer of Global Power, said. "At the same time, by refinancing our interim DIP and previous revolving debt and term loans, this new credit facility has also streamlined and brought a greater level of clarity to our debt structure." Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc. aka GEEG Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). Attorneys at White & Case LLP and The Bayard Firm, P.A., represent the Debtors. The Official Committee of Unsecured Creditors appointed in the Debtors' cases has selected Landis Rath & Cobb LLP as its counsel. As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. The Debtors' exclusive period to filed a chapter 11 plan expires on Jan. 26, 2007. GSMPS' MORTGAGE: Fitch Holds Low-B Ratings on Three Certificates ---------------------------------------------------------------- Fitch Ratings affirms GSMPS' Mortgage Loan Trusts, mortgage pass- through certificates: * GSMPS Mortgage Loan, series 1998-1 -- Class A at 'AAA'; and, -- Class M at 'A+'. * GSMPS Mortgage Loan, series 1998-2 -- Class A at 'AAA'; and, -- Class M 'AA-'. * GSMPS Mortgage Loan, series 1998-3 -- Class A at 'AAA'; and, -- Class M at 'A+'. * GSMPS Mortgage Loan, series 1998-4 -- Class A at 'AAA'; and, -- Class M at 'A+'. * GSMPS Mortgage Loan, series 1998-5 -- Class A at 'AAA'; and, -- Class M at 'AA'. * GSMPS Mortgage Loan, series 1999-1 -- Class A at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AA+'; -- Class B-3 at 'A+'; -- Class B-4 at 'BBB+'; and, -- Class B-5 at 'BB'. * GSMPS Mortgage Loan, series 1999-2 -- Class A at 'AAA'; and, -- Class M at 'A'. * GSMPS Mortgage Loan, series 1999-3 -- Class A at 'AAA'; and, -- Class M at 'A+'. * GSMPS Mortgage Loan, series 2000-1 -- Class A at 'AAA'; and, -- Class M at 'A'. * GSMPS Mortgage Loan, series 2001-1 -- Class B-1 at 'AA+' -- Class B-2 at 'A+'; -- Class B-3 at 'BBB+'; -- Class B-4 at 'BB+'; and, -- Class B-5 at 'B'. * GSMPS Mortgage Loan, series 2001-2 -- Class A at 'AAA'; and, -- Class M at 'AA-'. * GSMPS Mortgage Loan, series 2002-1 -- Class A at 'AAA'. The underlying collateral for these transactions consists of mortgage loans insured by the Federal Housing Administration and partially guaranteed by the Department of Veterans Affairs or the Rural Housing Service. The mortgage loans are secured by first liens on one- to four-family residential real properties and had been contractually delinquent at origination. The mortgage loans were purchased by Goldman Sachs from various sellers and are being serviced by various entities. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $336.1 million of outstanding certificates. As of the November 2006 remittance period, the trusts are seasoned from a range of 37 to 102 months and the pools factors range from approximately 10% to 33% outstanding. Fitch will continue to closely monitor these transactions. GTSI CORP: Nasdaq Sets January 9 as Financials Filing Deadline -------------------------------------------------------------- GTSI Corp. received a letter from the NASDAQ Listing Qualifications Panel stating that the Company has been granted until Jan. 9, 2007 to file its Form 10-Q for the quarter ended June 30, 2006, its Form 10-Q for the quarter ended Sept. 30, 2006, and the amended Form 10-K's and Form 10-Q's containing all required restatements of financial statements. "We are pleased that NASDAQ has granted the extension until Jan. 9, 2007," GTSI president and chief executive officer Jim Leto said. "Despite being incredibly close to completing this process, the Company and its independent auditors need additional time to complete the necessary work. We are eager to have this matter completed and thankful to our investors, customers, and employees for their loyalty and support during this period." It is anticipated that the filing of the restatements of financial statements for fiscal years 2003, 2004 and 2005, and the quarter ended March 30, 2006, as well as the quarterly filings for the quarters ended June 30, 2006 and Sept. 30, 2006 will be completed in December. Headquartered in Northern Virginia, GTSI Corp. (NASDAQ: GTSI) -- http://www.GTSI.com/-- is an information technology product and solutions provider, combining products and services to produce solutions that meet government's evolving needs. For more than two decades, GTSI has focused exclusively on Federal, State, and Local government customers worldwide, offering a broad range of products and services, an extensive contract portfolio, flexible financing options, global integration and worldwide distribution. GTSI's Lines of Business incorporate certified experts and deliver exceptional solutions to support government's critical transformation efforts. Additionally, GTSI focuses on systems integrators on behalf of government programs. Going Concern Doubt Ernst & Young LLP expressed substantial doubt about GTSI Corp.'s ability to continue as a going concern after auditing the company's 2004 and 2005 financials. The auditors pointed to the company's net losses and covenant defaults as of Jan. 31, 2006. GUESS? INC: Improved Performance Cues S&P's to Lift Rating to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Los Angeles-based specialty apparel retailer Guess? Inc. to 'BB' from 'BB-'. The outlook is positive. The upgrade comes after the report that Guess? Royalty Finance LLC, an indirect wholly owned subsidiary of Guess?, will redeem all of the outstanding 6.75% secured notes due 2012, plus accrued and unpaid interest and a redemption premium, for cash on Dec. 20, 2006. "The upgrade also reflects Guess?' improved operating performance in the past three years and increased geographic diversity," said Standard & Poor's credit analyst Diane Shand. The ratings on Guess? reflect the inherent volatility of the apparel industry, the company's highly competitive market segment, and the fashion sensitivity of its core market. Offsetting these risks are the company's well-recognized brand name, improving operating results, strengthening credit protection measures, and geographic diversity. Guess? designs, markets, and distributes a collection of casual apparel under the Guess? umbrella brand name. The brand originated in the early 1980s and has remained a good competitor in the apparel industry despite an increasingly crowded market. In its core 15-25 age group, Guess? competes with The Gap, Abercrombie & Fitch, DKNY, Calvin Klein, Polo Jeans, and Tommy Hilfiger U.S.A. Inc., among others. This age group tends to be more unpredictable than older shoppers in its use of discretionary spending on apparel, especially in the more fashionable segments in which Guess? competes. Because of the continual challenge of being on target with the right fashions each season, the company has experienced high earnings volatility. Consumer response to Guess?' product repositioning has been good. Same-store sales have been strong since the second quarter of 2003, and the wholesale business sales comparisons turned positive year-over-year in the fourth quarter of 2003. The company has also done well with its newer concepts, MARCIANO and Guess Accessories. Guess?' operating results have followed an upward trend for almost past three years. The operating margin increased to 24.3% in the 12 months ended Sept. 30, 2006, from 20.4% a year earlier, due to sales leverage, a shift in mix toward higher-margin European revenues, more full-price selling, and good cost controls. Currently, Europe is the largest contributor to the company's results, generating nearly a third of revenues and more than half of operating profit in the 2006 third quarter, with North America and worldwide licensing accounting for the remainder. Cash flow protection measures have strengthened as a result of better operating performance and debt reduction and are strong for the rating category. EBITDA interest coverage increased to 6.7x for the 12 months ended Sept. 30, 2006, from 4.7x in the year-ago period, while funds from operations to total debt increased to 41% from 30%. GULFMARK OFFSHORE: Sells 2 Million Shares to Jefferies & Company ---------------------------------------------------------------- GulfMark Offshore Inc. agreed to issue and sell 2,000,000 shares of its common stock to Jefferies & Company Inc. at a price of $38.50 per share. GulfMark has also granted Jefferies & Company an option to acquire an additional 300,000 shares to cover overallotments. The shares are being resold by Jefferies & Company to the public under a shelf registration statement. GulfMark estimates that it will receive net proceeds from this offering of $76.9 million ($88.4 million if the underwriter exercises its overallotment option in full), after deducting estimated offering expenses of $150,000 payable by it. GulfMark intends to use those net proceeds to repay amounts borrowed under its existing credit facility and for general corporate purposes, which may include funding of its new vessel construction program and the acquisition of other vessels. The offering is being made only by means of a prospectus and related prospectus supplement, a copy of which may be obtained from: Jefferies & Company, Inc. Attention: Prospectus Department 520 Madison Avenue New York, New York 10022 Headquartered in Houston, Texas, Gulfmark Offshore Inc. -- http://www.gulfmark.com/-- together with its subsidiaries, provides offshore marine services primarily to companies involved in offshore exploration and production of oil and natural gas. The majority of the company's operations are in the North Sea with the balance offshore Southeast Asia and the Americas. * * * As reported in the Troubled Company Reporter on Oct. 2, 2006, Standard & Poor's Ratings Services lowered the corporate credit rating on Gulfmark Offshore Inc. to 'B+' from 'BB- and the company's senior unsecured rating to 'B' from 'B+'. Outlook was revised to stable from negative. HARD ROCK: Las Vegas Hotel Sale Cues S&P to Hold Developing Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services reported that its ratings on Hard Rock Hotel Inc., including its 'B+' corporate credit rating, remain on CreditWatch with developing implications where they were placed on Feb. 22, 2006, after the company's disclosure that its owner, Peter Morton, had agreed to sell the Hard Rock Hotel & Casino in Las Vegas to Morgans Hotel Group Co. for $421 million, which is subject to a number of adjustments. At Sept. 30, 2006, there was $189 million of debt outstanding. In resolving its CreditWatch listing, Standard & Poor's will monitor the situation as it develops. Should the company's outstanding bonds be fully redeemed, Standard & Poor's would withdraw its ratings and remove them from CreditWatch. However, should some or all of the notes remain outstanding under a more highly leveraged capital structure, ratings could be lowered. HARTCOURT COS: Restates 2005 Quarter Ended August 31 Financials --------------------------------------------------------------- The Hartcourt Companies Inc. has amended its quarterly report on Form 10-Q for the three months ended Aug. 31, 2005, reflecting improper accounting of certain transaction and presentation in the in the company's financial statements subsequent to the issuance of the company's financial statements for the year ended Dec. 31, 2003. During the year ended Dec. 31, 2003, the company, through Hartcourt Capital Inc., a subsidiary, acquired four Chinese companies located and operated in China. The company has restated its financial statements based on the subsequent appraisal of the fair value of the four companies at each acquisition date. Kabani & Company Inc., Certified Public Accountants, has audited the consolidated financial statements for the year ended Dec. 31, 2003, after the restatements, and expressed their opinion "the financial statements referred to above present fairly, in all material respects, the financial position of the Hartcourt Companies, Inc. as of Dec. 31, 2003, in conformity with accounting principals generally accepted in the United States of America." On Aug. 9, 2006, the company filed an amendment to its Form 10-KSB for the year ended Dec. 31, 2003, with United States Securities and Exchange Commission to reflect the changes. The changes required corresponding adjustments to the financial statements for the year ended Dec. 31, 2004, the transitional period ended May 31, 2005, and subsequently filed reports on Form 10-Q. As a result, on Oct. 10, 2006, the company amended a) its annual report on Form 10-KSB for the twelve months ended Dec. 31, 2004; and b) its annual report on Form 10-K for the five month transitional period ended May 31, 2005. Restated Financial Results The company's balance sheet at Aug. 31, 2005, as restated, showed total assets of $15,146,504, minority interests of $598,453, total liabilities of $8,899,287, and total shareholders' equity of $5,648,764. For the three-month periods ended Aug. 31, 2005, the company reported a $31,534 net income on net sales of $10,768,764, compared to a $2,847,967 net loss on $18,853,877 of net sales for the three month periods ended Aug. 31, 2004. A full-text copy of the company's restated financial report is available for free at http://researcharchives.com/t/s?1668 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 16, 2006, Kabani & Company Inc. expressed substantial doubt about The Hartcourt Companies Inc.'s ability to continue as a going concern after it audited the company's financial statements for the transition period ended May 31, 2005. The auditing firm pointed to the company's accumulated deficit of $64,874,414 and negative cash flow from operations amounting $1,256,734 at May 31, 2005. About The Hartcourt Companies Inc. The Hartcourt Companies Inc. is a business development and investment holding company specializing in the Chinese Information Technology market. HOLYOKE HOSPITAL: Fitch Holds BB+ Rating on $11.4 Million Bonds --------------------------------------------------------------- Fitch affirms the 'BB+' rating on the $11,410,000 Massachusetts Health and Educational Facilities Authority, Holyoke Hospital Issue, series B of 1994. The Rating Outlook is revised to Stable from Negative. Fitch analyzed the financial statements of Valley Health System, Inc. and Affiliates; the parent and sole corporate member of Holyoke Hospital. Holyoke Hospital is the only entity obligated for the series B bonds and accounted for 93.6% of VHS's operating revenue in fiscal 2005. The Stable Rating Outlook and rating affirmation are primarily based on VHS's stabilized operating performance. VHS reported a breakeven operating margin in fiscal 2005 after negative operating performance in fiscal years 2003 and 2004 and is expecting breakeven operating performance for fiscal 2006. Through the first 11 months of fiscal 2006, hospital only operating performance was a profitable $729,000. In order to remain at the current rating level, Fitch expects VHS to remain profitable and for liquidity levels to remain at or above current levels. Any decline in VHS's current financial and operational position will result in negative rating pressure. If VHS is able to improve liquidity indicators and achieve positive operating margins, upward movement of the rating may occur. The rating is supported by additional funding from the state and a growing medical staff. Holyoke is considered an essential community provider by the state and receives additional state funding to offset the level of uncompensated care provided to the community. In fiscal years 2005 and 2006, Holyoke received payments of approximately $3 million from the state's uncompensated care pool with an additional $3.9 million expected for fiscal year 2007. Holyoke also benefited from one-time $2.1 million and $3.6 million allocations in state-appropriated distressed provider funds. The state has established a grant process for these funds and Holyoke's financial profile and payor mix provided the hospital with an additional $3.25 million in funding for fiscal 2007 through this grant process. However, future allocation of state funds from this pool is uncertain. Holyoke has successfully recruited new physicians to its medical staff which should support growing patient volumes. Recent patient volumes have been flat, but consistent with trends seen across the region. Credit concerns include light liquidity, high average age of plant and a vulnerability to governmental payors. At fiscal 2005, liquidity was low with 46.5 days cash on hand and 68.3% cash to debt. Unrestricted cash has dropped to $13.57 million at fiscal 2005, from $15.7 million at fiscal 2003, but has grown compared to fiscal 2004. Fitch expects the level of unrestricted cash for the system to increase to approximately $18 million at fiscal 2006. According to management, the system had over $18 million in unrestricted cash at Aug. 31, 2006. Despite recent capital investments, VHS maintains an extremely high average age of plant of 16.2 years at fiscal 2005. Medicaid accounted for 18.6% of gross patient revenue in fiscal 2005, which is very high when compared to the rest of Fitch's portfolio and exposes VHS to possible future reimbursement constraints. Valley Health System, Inc. is located in Holyoke, Massachusetts and is comprised of Holyoke Hospital and other healthcare entities. In fiscal 2005, VHS reported total operating revenues of approximately $114.9 million. VHS covenants to provide quarterly and annual financial information to the trustee and to bondholders upon request. However, the documents governing the rated issue predate Rule 15c2-12 and VHS does not disclose any financial information to the Nationally Recognized Municipal Securities Information Repositories which Fitch views negatively. Fitch considers disclosure of annual and quarterly financial information to the NRMSIRS and to any appropriate state information depository, whether voluntary or mandatory, to be a management 'best practice' and the industry standard. INLAND FIBER: Court Extends Removal Period to January 15 -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended, until Jan. 15, 2007, the period within which Inland Fiber Group LLC may file notices of removal with respect to pending prepetition civil actions. As reported in the Troubled Company Reporter on Oct. 30, 2006, the Debtors had informed the Court that they are parties to state court action involving, among other things, the Debtors' $225 million 9-5/8% unsecured senior notes due 2007. The Debtors told the Court that the extension will give them more time to confirm and consummate their plan of reorganization through resolving the pending actions. Headquartered in Klamath Falls, Oregon, Inland Fiber Group LLC, aka U.S. Timberlands Klamath Falls LLC, and its affiliate Fiber Finance Corp., grow trees and sell logs, standing timber, and timberland. The Debtors filed a chapter 11 petition on Aug. 18, 2006 (Bankr. D. Del. Case Nos. 06-10884 & 06-10885). William P. Bowden, Esq. at Ashby & Geddes P. A. and Glenn E. Siegal, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. The Hon. Kevin J. Carey has confirmed Inland Fiber Group, LLC, and its debtor-affiliates' chapter 11 plan of reorganization. When the Debtors filed for protection from their creditors, Inland Fiber reported $81,890,311 in total assets and $264,433,754 in total liabilities while its debtor-affiliate, Fiber Finance, disclosed $1,048 in total assets and $263,074,983 in total debts. Judge Carey confirmed the Debtors' Plan of Reorganization on November 2006. INTELSAT LTD: Sept. 30 Balance Sheet Upside-Down by $494.6 Million ------------------------------------------------------------------ Intelsat Ltd. incurred a $172.5 million net loss on $528.4 million of net revenues for the three months ended Sept. 30, 2006, compared to a $54.5 million net loss on $293.5 million of net revenues for the same period in 2005. The increase of net loss was primarily due to the acquired operations of PanAmSat Holdco, and the net lower impairment charge and lower professional fees expenses in 2006 due to the one-time costs incurred in 2005 associated with the Acquisition Transactions. At Sept. 30, 2006, the company's balance sheet showed $12.4 billion in total assets and $12.9 billion in total liabilities, resulting in a $494.6 million stockholders' deficit. At Sept. 30, 2006, the company had approximately $381 million of expenditures remaining under existing satellite construction contracts and satellite launch contracts. Satellite launch and in-orbit insurance contracts related to future satellites to be launched are cancelable up to thirty days prior to the satellite's launch. As of Sept. 30, 2006, the company did not have any non- cancelable commitments related to existing launch insurance or in- orbit insurance contracts for satellites to be launched. The company expects its most significant cash outlays for the remainder of 2006 to be the payment of interest on our outstanding debt and, to a lesser extent, capital expenditures. The company plans to spend approximately $85 million throughout the remainder of 2006 for capital expenditures. The company intends to fund these requirements through cash on hand, cash provided by operating activities and, if necessary, borrowings under the new senior secured credit facilities entered into by Intelsat Sub Holdco and the amended and restated credit facilities entered into by Intelsat Corp., in connection with the PanAmSat Acquisition Transactions. A full-text copy of the company's quarterly report is available for free at http://researcharchives.com/t/s?1694 Intelsat, Ltd. -- http://www.intelsat.com/-- offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high- quality connections, global reach and reliability. INTERSTATE BAKERIES: Wants Board Affirmed; Brencourt Suit Enjoined ------------------------------------------------------------------ Interstate Bakeries Corporation and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Western District of Missouri to constitute their Board to consist of the nine individuals currently serving as directors of the company: 1. Michael Anderson, 2. Robert Calhoun, 3. Frank Horton, 4. G. Kenneth Baurn, 5. Ronald Thompson, 6. Leo Banatar, 7. Richard Metrick, 8. William Mistretta, and 9. David Weinstein. The Debtors also ask the Court to enjoin Brencourt Advisors LLC from prosecuting the Delaware Action. The Debtors believe that the continued prosecution of the Delaware Action may interfere with the Court's jurisdiction to constitute the Board. As reported in the Troubled Company Reporter, Brencourt Advisors has filed a lawsuit in the Delaware Court of Chancery to compel the Debtors to hold a shareholders' meeting to elect new directors of the company. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that for companies not in bankruptcy, corporate governance is solely the province of shareholder democracy. The shareholders elect directors who owe fiduciary duties solely to them and the corporation. When a company becomes a debtor, the directors' fiduciary duties expand to encompass creditors, Mr. Ivester contends. The parochial concerns of shareholders, who compete with the corporation's creditors, give way to the best interest of the estate. If there is a dispute between the shareholders and the debtor or the creditors, the bankruptcy court will determine what is in the estate's best interests, Mr. Ivester points out. Mr. Ivester asserts that Brencourt's Delaware Action delays completion of the Debtors' reorganization and provide Brencourt with leverage it needs to "create" some value for its equity stake in the company. Brencourt has not, and cannot, identify any compelling need to unseat the Board, Mr. Ivester argues. There is no suggestion that equity holders have been disenfranchised nor can Brencourt identify any misconduct by the current Board, Mr. Ivester says. The Delaware legislature has recognized, Mr. Ivester continues, that if a corporation is in bankruptcy and the parties cannot otherwise agree, the bankruptcy court has the power to prevent the equity holders, who are at the bottom of the bankruptcy priority scheme, from using the mechanisms of corporate governance to derail a company's reorganization efforts. The Debtors assert that they are at a critical juncture, and a change of control of the Board at the insistence of a constituency that may well be out of the money is not in the best interest of their estates. The Debtors' Chapter 11 cases have lasted longer than hoped, and the fact that they are still in bankruptcy is seriously eroding their financial performance, Mr. Ivester notes. Mr. Ivester informs the Court that the Board, with input from all constituent groups, is making every effort for the Debtors to emerge from bankruptcy as soon as it is practical to do so, including: -- searching for a new chief executive officer, -- finalizing a five-year business plan, -- exploring exit financing alternatives, and -- considering potential value-maximizing asset sales. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due Aug. 15, 2014, on Aug. 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTERSTATE BAKERIES: Says Brencourt Suit Threatens Reorganization ----------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates seek injunctive relief to enjoin Brencourt Advisors LLC from prosecuting an action seeking to convene a shareholder meeting for the purpose of effectuating a replacement of the company's current board of directors. Brencourt filed its complaint in the Delaware Court of Chancery. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, argues that the Delaware Action should not be permitted to proceed because it will seriously threaten the Debtors' ability to reorganize by: (1) disrupting management and hindering the Debtors' search for a new chief executive officer; (2) creating a default under the DIP Financing Facility; (3) causing the Debtors to lose customers, or at the least making it extremely difficult to garner new customers, recover lost sales, or increase sales to existing customers; (4) causing vendors to tighten credit terms; (5) making it highly likely that the Debtors will not be able to file their outstanding financial reports in time to stop the Securities and Exchange Commission from deregistering Interstate Bakeries Corporation's common stock; and (6) increasing the Debtors' losses of key employees. Mr. Ivester contends that the prosecution of the Delaware Action will also occupy an inordinate amount of the Board and the management's time and focus that could more productively be spent on the reorganization effort to benefit all constituencies. In addition, important deadlines are looming, including the Debtors' exclusive period to file a plan, which will expire on January 31, 2007. Mr. Ivester relates that the Steering Committee for the Debtors' prepetition lenders has informed the Debtors that if Brencourt succeeds, it will move to terminate the Debtors' Exclusive Period for Plan Filing and the appointment of a Chapter 11 trustee and will withdraw its consent to the use of the Debtors' cash collateral. Moreover, the Debtors are parties to Management Continuity Agreements with certain key senior executives and changes in the Board would constitute a change in control under those Agreements. If any of the executives is terminated within two years from the date of change, significant claims under the Agreements may be triggered, Mr. Ivester says. Hence, the Debtors ask the Court to enjoin Brencourt from prosecuting the Delaware Action. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due Aug. 15, 2014, on Aug. 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) JP MORGAN: S&P Assigns Low-B Ratings on $79 Million Certificates ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to J.P. Morgan Chase Commercial Mortgage Securities Trust 2006-LDP9's $4.87 billion commercial mortgage pass-through certificates series 2006-LDP9. The preliminary ratings are based on information as of Dec. 6, 2006. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Class A-1, A-1S, A-2, A-2S, A-3, A-3S, A-4, A-1A, X, A-M, A-MS, A-J, A-JS, B, B-S, C, C- S, D, and D-S are currently being offered publicly. Standard & Poor's analysis of the portfolio determined that, on a weighted average basis, the pool has a debt service coverage of 1.43x, a beginning LTV of 104.1%, and an ending LTV of 99.4%. The rated final maturity date for these certificates is May 2047. Preliminary Ratings Assigned J.P. Morgan Chase Commercial Mortgage Securities Trust 2006-LDP9 Recommended Preliminary credit Class Rating amount support ----- ------ ----------- ----------- A-1 AAA $59,515,000 30.000% A-1S AAA $129,763,000 30.000% A-2 AAA $141,632,000 30.000% A-2S AAA $575,000,000 30.000% A-3 AAA $1,613,329,000 30.000% A-3S AAA $145,260,000 30.000% A-4 AAA $50,000,000 30.000% A-1A AAA $697,663,000 30.000% X* AAA $4,874,518,838 N/A A-M AAA $366,020,000 20.000% A-MS AAA $121,432,000 20.000% A-J AAA $320,267,000 11.250% A-JS AAA $106,253,000 11.250% B AA $73,204,000 9.250% B-S AA $24,287,000 9.250% C AA- $22,876,000 8.625% C-S AA- $7,589,000 8.625% D A $50,328,000 7.250% D-S A $16,697,000 7.250% E A- $41,177,000 6.125% E-S A- $13,661,000 6.125% F BBB+ $41,177,000 5.000% F-S BBB+ $13,661,000 5.000% G-S BBB $12,144,000 4.000% H BBB- $45,753,000 2.750% H-S BBB- $15,179,000 2.750% J BB+ $18,280,000 2.375% K BB $18,279,000 2.000% L BB- $12,186,000 1.750% M B+ $12,187,000 1.500% N B $6,093,000 1.375% P B- $12,186,000 1.125% NR NR $54,838,838 N/A * Interest-only class with a notional amount. N/A -- Not applicable. NR -- Not rated. K-TEL INT'L: Sept. 30 Balance Sheet Upside-Down by $12.3 Million ---------------------------------------------------------------- K-tel International Inc. reported a $355,000 net loss on $888,000 of net sales for the first quarter ended Sept. 30, 2006, compared with a $264,000 net loss on $1.2 million of net sales for the same period in 2005. The decrease in sales is primarily due to reduced domestic music revenue. The increase in net loss is attributable to the decrease in sales and the $52,000 increase in interest expenses. At Sept. 30, 2006, the company's balance sheet showed $3.1 million in total assets, and $15.4 million in total liabilities, resulting in a $12.3 million total stockholders' deficit. At Sept. 30, 2006, the company's balance sheet also showed strained liquidity with $2.7 million in total current assets available to pay $15.4 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the first quarter ended Sept. 30, 2006, are available for free at: http://researcharchives.com/t/s?1695 Going Concern Doubt Grant Thornton LLP, in Minneapolis, Minnesota, raised substantial doubt about K tel International Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended June 30, 2006 and 2005. The auditing firm pointed to the company's significant recurring losses from operations and net working capital deficit About K-tel International Inc. K-tel International Inc.'s principal activity is to license its music catalog internationally and market entertainment products through retail and direct response marketing channels in the United States and Europe. It operates through two segments: Music and Licensing. The Music segment consists primarily of the sale of pre-recorded music both from the company's music master catalog and under licenses obtained from other record companies. In the Licensing segment, the company licenses the rights to its master music catalog to third parties worldwide for use in albums, films, television programs and commercials. LIBERTY MEDIA: Intends to Swap News Corp. Stake with DirectTV ------------------------------------------------------------- Liberty Media Corp. said it plans to exchange its stake in News Corp. for 39% of DirectTV Group Inc., Cecile Daurat of Bloomberg News reports. Greg Maffei, Liberty Media's chief executive officer, told Bloomberg that the company is holding talks about some alternatives including DirectTV. "One of the appeals of DirectTV is there's a lot of financial flexibility," Mr. Maffei said. If a deal is reached, Liberty Media might reduce its stake in DirectTV to as small as 21.5%, Mr. Maffei further said in the report. Liberty Media, Mr. Maffei added, could keep the stake or seek full control of the business, which would minimize taxes. The New York Times relates that the parties has reached an $11 billion deal that includes News Corp.'s stake in DirectTV. Time Warner Stake Mr. Maffei also mentioned in the report about the ongoing talks about swapping Liberty Media's stake in Time Warner Inc. for Time Warner assets, including Atlanta Braves. The Atlanta Braves talks, Mr. Maffei said, are difficult by baseball ownership rules. Mr. Maffei added that a Braves deal with Time Warner in which Liberty Media has a 4% stake, wouldn't "move the needle" too much for Liberty. About News Corp. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. About Liberty Media Based in Englewood, Colorado, Liberty Media Corporation (NASDAQ: LINTA, LCAPA) -- http://www.libertymedia.com/-- owns a broad range of electronic retailing, media, communications and entertainment businesses and investments. Its businesses include some of the world's most recognized and respected brands and companies, including QVC, Encore, Starz, IAC/InterActiveCorp, Expedia and News Corporation. The company was a subsidiary of AT&T, which had acquired former parent Tele-Communications, Inc., in 1999. In 2001 AT&T spun off Liberty Media as part of the phone giant's plan to split its empire into several companies. Liberty Media completed a spin off of its own in 2004 by separating its international assets into a new company. The firm is chaired by former TCI head John Malone. * * * As reported in the Troubled Company Reporter on Oct. 17, 2006, Moody's affirmed Liberty Media LLC's Ba2 Corporate Family and senior unsecured ratings following Liberty's establishment of a new $1.75 billion credit facility at QVC, Inc., Liberty's primary operating subsidiary. Moody's said the rating outlook was changed to negative from stable. MASTR: Weaker-Than-Expected Performance Cues S&P's Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M-7 and M-8 certificates issued by MASTR Second Lien Trust 2006-1 and placed them on CreditWatch with negative implications. At the same time, the ratings on three other classes were placed on CreditWatch negative. Concurrently, the ratings on four other classes from the same transaction were affirmed. The downgrades and CreditWatch placements reflect weaker-than- expected collateral pool performance. In the past five months, monthly net losses have consistently outpaced excess interest cash flow. Although the transaction is only nine months seasoned, it has incurred $10.791 million in cumulative realized losses since July 2006. This unfavorable performance trend has reduced overcollateralization to $5.248 million from a high of $10.717 million in June 2006. As of the November 2006 remittance report, the O/C amount was 1.62%, or $5.248 million of the original pool balance, which is well below its target of 6.15%, or $19.868 million. Furthermore, $8.478 million of the pool is seriously delinquent, which strongly suggests that this negative performance trend could continue. Standard & Poor's will continue to closely monitor the performance of the certificates with ratings on CreditWatch. If monthly losses continue to outpace monthly excess interest cash flow, further negative rating actions can be expected. Conversely, if pool performance improves and credit support is not further compromised, Standard & Poor's will affirm the ratings and remove them from CreditWatch. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings, despite the negative performance trend. The collateral consists primarily of fixed-rate, closed-end, second-lien mortgage loans secured by one- to four-family residential properties. At issuance, Fremont Investment & Loan, American Home Mortgage Corp., and Accredited Home Lender Inc. originated approximately 47%, 29%, and 16% of the mortgage loans, respectively. Ratings Lowered And Placed On Creditwatch Negative MASTR Second Lien Trust 2006-1 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- M-7 B+/Watch Neg BB+ M-8 B/Watch Neg BB Ratings Placed On Creditwatch Negative MASTR Second Lien Trust 2006-1 Mortgage Pass-Through Certificates Rating ------ Class To From ----- -- ---- M-4 BBB+/Watch Neg BBB+ M-5 BBB/Watch Neg BBB M-6 BBB-/Watch Neg BBB- Ratings Affirmed MASTR Second Lien Trust 2006-1 Mortgage Pass-Through Certificates Class Rating ----- ------ A AAA M-1 AA M-2 A M-3 A- MAYFLOWER NATIONAL: A.M. Best Places B (Fair) Rating Under Review ----------------------------------------------------------------- A.M. Best Co. has placed the financial strength rating of B (Fair) of Mayflower National Life Insurance Company in New Orleans, Louisiana, under review with positive implications following Assurant Inc.'s announcement that it has entered into a definitive agreement to acquire all the outstanding stock of Mayflower National from Service Corporation International [NYSE: SCI]. SCI acquired Mayflower National on Nov. 28, 2006 as part of its acquisition of Alderwoods Group, Inc. Under the terms of the agreement, SCI will receive $65 million in cash from Assurant. This acquisition is expected to add approximately $51.9 million in annual net premiums written to Assurant. The FSR of Mayflower National will remain under review pending regulatory approval, and the close of this transaction, which is expected in early 2007. Assurant's ratings are unchanged by this proposed transaction. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. MERIDIAN AUTOMOTIVE: Judge Walrath Confirms Fourth Amended Plan --------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware has confirmed the Revised Fourth Amended Reorganization Plan of Meridian Automotive Systems Inc. and its eight debtor-affiliates. All objections to confirmation of the Plan have either been resolved by agreement of the parties, withdrawn, or overruled. Judge Walrath determined that the Debtors' Plan satisfied the 16 statutory requirements under Section 1129(a) of the Bankruptcy Code. Specifically, the Plan: A. Complies with and satisfies all applicable provisions of the Bankruptcy Code as required by Section 1129(a)(1), including, without limitation, Sections 1122 and 1123 of the Bankruptcy Code, and Rule 3016 of the Federal Rules of Bankruptcy Procedure: * As required by Section 1122(a), each Class of Claims or Interests contains only Claims or Interests that are substantially similar to the other Claims or Interests within that Class. * The Plan designates each Class of Claims and Interests, as required by Section 1123(a)(1). * The Plan specifies the Unimpaired Classes of Claims and the treatment of each Class of Claims and Interests that is Impaired, in accordance with Sections 1123(a)(2) and 1123(a)(3). * In accordance with Section 1123(a)(4), the Plan provides for the same treatment by the Debtors of each Claim or Interest within a particular Class. * Pursuant to Section 1123(a)(5), the Plan provides adequate and proper means for its implementation. On the Effective Date of the Plan, the Debtors will have sufficient cash to make all payments required to be made on the Effective Date pursuant to the terms of the Plan. * The Plan provides for the inclusion in the Certificate of Incorporation and By-Laws of all provisions required to be included in the charter or other constituent document of a debtor under Section 1123(a)(6) including, without limitation, the prohibition against the issuance of non- voting equity securities. * As required by Section 1123(a)(7), the Debtors have selected the initial officers and directors of the Reorganized Debtors in a manner consistent with the interests of Holders of Claims and Interests and with public policy. The manner in which successor officers and directors will be chosen is also consistent with the interests of Holders of Claims and Interests and with public policy. * In accordance with Section 1123(b)(6), the Plan does not contain any discretionary provision inconsistent with the applicable provisions of the Bankruptcy Code. * The Plan is dated and identifies the entities submitting it as proponents, thereby satisfying Bankruptcy Rule 3016(a). * Other than conduct otherwise enjoined by the Bankruptcy Code, the Plan describes in specific and conspicuous language all acts to be enjoined, and identifies the entities subject to that injunction, in accordance with Bankruptcy Rule 3016(c). B. The Debtors, as proponents of the Plan, have complied with all applicable provisions of the Bankruptcy Code, as required by Section 1129(a)(2), including, without limitation, Sections 1123, 1125 and 1126 and Bankruptcy Rules 3017, 3018 and 3019. Votes for acceptance and rejection and any other election under the plan as provided for in the Ballots were solicited in good faith. C. Pursuant to Section 1129(a)(3), the Debtors have proposed the Plan in good faith and not by any means forbidden by law. The Plan is designed to allow each of the Debtors to reorganize on a going concern basis while maximizing recoveries to their creditors. D. Pursuant to Section 1129(a)(4), any payment made or promised by the Debtors or a person issuing securities or acquiring property under the Plan, for services rendered or expenses incurred in connection with the Chapter 11 cases, or in connection with the Plan and incident to the Chapter 11 cases, has been disclosed to the Court. The Plan provides for Court approval of certain administrative expense payments. E. Pursuant to Section 1129(a)(5), the Debtors have disclosed the identity and affiliations of the initial directors and officers of the Reorganized Debtors, and the appointment to, or continuance in, those offices by those persons is consistent with the interests of the Debtors' creditors and with public policy. The Debtors have also disclosed the identity and affiliations of insiders who will be employed or retained by the Reorganized Debtors and the nature of compensation of those insiders from and after the Effective Date. F. Does not contain any rate changes subject to the jurisdiction of any governmental regulatory commission and will not require governmental regulatory approval. Accordingly, Sec. 1129(a)(6) is inapplicable to the Plan. G. Satisfies the "best interests of creditors" test under Section 1129(a)(7) of the Bankruptcy Code. With respect to each Impaired Class of Claims or Interests, each Holder of an Allowed Claim or Interest in that Class has either accepted the Plan or will receive or retain under the Plan on account of such Claim or Interest property of a value, as of the Effective Date, that is not less than the amount that Holder would receive or retain if the Debtors were liquidated on the Effective Date pursuant to Chapter 7 of the Bankruptcy Code. The liquidation analysis, including the methodology used and estimations and assumptions made, and the evidence that was proffered at the Confirmation Hearing: (a) are persuasive and credible as of the dates the evidence was prepared, presented or proffered; (b) either have not been controverted by other persuasive evidence or have not been challenged; (c) are based upon reasonable and sound assumptions; and (d) provide a reasonable estimate of the liquidation value of the Debtors' Estates upon a conversion to a Chapter 7 proceeding. H. Pursuant to Section 1129(a)(8), the Plan has been accepted by the Impaired Classes of Claims entitled to vote. The Impaired Class of Claims are Class 3 Prepetition First Lien Claims, Class 4 Prepetition Second Lien Claims and Class 5 General Unsecured Claims. Accepting Rejecting ----- ----------------------------- ----------------------- Class No. % Amount % No. % Amount % ----- --- ---- ------------ ---- --- --- --------- ---- 3 26 100% $295,110,985 100% - 0% - 0% 4 5 100% 178,267,009 100% - 0% - 0% 5 341 83% 19,776,213 73% 72 17% $7,310,668 27% ----- --- ---- ------------ ---- --- --- --------- ---- Classes 1 and 2 are Unimpaired under the Plan and are conclusively presumed to have accepted the Plan pursuant to Section 1126(f). Because the Plan provides that the Holders of Claims in Class 6 and Prepetition Meridian Interests in Class 7 will not receive any distributions or retain any property under the Plan, Classes 6 and 7 are conclusively deemed to have rejected the Plan pursuant to Section 1126(g). I. Provides for the statutorily mandated treatment of Adminis- trative Expense Claims, Priority Tax Claims, DIP Claims and Professional Compensation Claims and other Claims entitled to priority under Sections 507(a)(2)-(8) of the Bankruptcy Code in the manner required by, and complies in all respects with, Section 1129(a)(9) of the Bankruptcy Code. J. At least one Impaired Class of Claims has accepted the Plan, excluding the votes cast by insiders. Accordingly, Section 1129(a)(10) has been satisfied in all respects. K. The Plan is feasible. The evidence proffered or adduced at the Confirmation Hearing (i) is persuasive and credible, (ii) has not been contravened by other evidence, and (iii) establishes that the Plan is workable and has a reasonable likelihood of success, and that confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization of the Debtors. Accordingly, the requirements of Section 1129(a)(11) are satisfied in all respects. L. Provides for the payment of all fees payable pursuant to Section 1930(a)(6) of the Judiciary and Judicial Procedure Code with respect to each of the Chapter 11 Cases. The Debtors and the Reorganized Debtors have adequate means to pay all those fees. The Plan therefore satisfies the requirements of Section 1129(a)(12). M. In accordance with Section 1129(a)(13), the Plan provides for the continuation, after the Effective Date, of all retiree benefits, if any, as that term is defined in Section 1114 of the Bankruptcy Code, at the levels established pursuant to Sections 1114(e)(1) or 1114(g) at any time prior to the Confirmation Date, for the duration of the period that the Debtors are obligated to provide those benefits. N. Meridian is not required by a judicial or administrative order, or by statute, to pay a domestic support obligation. Section 1129(a)(14) is, therefore, inapplicable. 0. Meridian is not an individual, and accordingly, Section 1129(a)(15) is inapplicable. P. Meridian is a moneyed, business, or commercial corporation, and Section 1129(a)(16) is, thus, inapplicable. A full-text copy of the Confirmation Order and the Court's findings and conclusions of law is available for free at http://ResearchArchives.com/t/s?169b Headquartered in Dearborn, Mich., Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: Files Revised Fourth Amended Chapter 11 Plan ----------------------------------------------------------------- Meridian Automotive Systems Inc. and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware on Dec. 4, 2006, a revised version of their Fourth Amended Plan of Reorganization that incorporates certain technical modifications. The technical amendments, among other things, pertain to the "pooling of assets" and quarterly reports listing administrative expense and secured claims, Meridian President and Chief Executive Officer Richard E. Newsted, relates. The Amended Plan is premised on the pooling of the Debtors' assets solely for purposes of actions associated with the confirmation and consummation of the Plan. The separateness of the Chapter 11 cases will not be affected by the "pooling of the assets." Also, beginning with the quarter ending on March 31, 2007, the Reorganized Debtors will file quarterly reports with the Bankruptcy Court listing any Administrative Expense Claims or Secured Claims that were initially opposed by the Reorganized Debtors but ultimately became Allowed Claims during the preceding three months through resolution of the Reorganized Debtors' objections. The quarterly reports will include: * the name of the Holder of that Claim, * the scheduled amount of that Claim, * the proof of claim amount of that Claim, and * the Allowed amount of that Claim. A full-text blacklined copy of Meridian's 4th Amended Plan with the technical amendments is available for free at http://ResearchArchives.com/t/s?1689 Plan Compendium The Debtors also filed four revised Plan Compendium Exhibits on Dec. 4, 2006: 1. Reorganized Meridian's By-Laws, a full-text copy of which is available for free at http://ResearchArchives.com/t/s?169c 2. Litigation Trust Agreement In the event that the Litigation Trust receives any cash or proceeds in respect of the Collateral, the Litigation Trust will promptly repay the principal of the Loan then outstanding in an amount equal to the lesser of (x) the Prepayment Amount, and (y) the aggregate principal amount of the Loan then outstanding. "Prepayment Amount" means, with respect to any Collateral: (a) during the period beginning on the Effective Date and ending on the first anniversary of the Effective Date, 50% of the cash or proceeds received by or payable to the Litigation Trust in connection with that Collateral; (b) during the period beginning on the first anniversary of the Effective Date and ending 18 months after the Effective Date, 67% of the cash or proceeds received by or payable to the Litigation Trust in connection with that Collateral; and (c) thereafter, 100% of the cash or proceeds received by or payable to the Litigation Trust in connection with that Collateral. The Litigation Trust agrees that it will hold in trust for Meridian Automotive Systems, Inc., any Prepayment Amount that it receives in respect of the Collateral and will deliver those cash receipts to MASI as payment of principal of the Loan then outstanding, as and when required under the Litigation Trust Agreement. In the event that the Litigation Trust has cash on hand at any time in excess of (i) during the period beginning on the Effective Date and ending 18 months after the Effective Date, $2,500,000, or (ii) thereafter, $2,000,000, then the Litigation Trust will promptly repay the principal of the Loan then outstanding in an amount equal to the lesser of the Excess Cash Amount, and the aggregate principal amount of the Loan then outstanding. The Litigation Trust's obligation to reimburse MASI for expenses pursuant will extend only to costs and expenses related to or incurred in connection with the Obligations and will not include any expenses that MASI may incur as a result of the Litigation Trust's prosecution of the Actions under the Litigation Trust Agreement. A full-text copy of the Litigation Trust Agreement is available for free at http://ResearchArchives.com/t/s?169d 3. Warrant The common equity value of the company used for determination will not be less than the value available to holders of Common Stock upon a hypothetical liquidation of the company. A full-text copy of the Warrant is available for free at http://ResearchArchives.com/t/s?169e 4. Stockholders Agreement In connection with any Proposed Sale Transaction in which the Selling Holders desire to sell at least 55% of the Shares then outstanding for consideration consisting solely of cash payable in immediately available funds, the Selling Holders will have the right, at their option, to require to be sold, and each Remaining Holder will be obligated to sell, up to a percentage of Shares then held by the Remaining Holders that is equal to the percentage of Shares held by the Selling Holders to be sold to that Proposed Transferee for the same per Share consideration and on the same terms and conditions upon which the Selling Holders intend to sell their Shares. If the Selling Holders (a) desire to sell at least 25% of the Shares then outstanding and (b) are not eligible to or do not fully exercise their Drag Along Rights, then each Remaining Holder will have the option to sell up to a percentage of Shares held by them that is equal to the percentage of Shares held by the Selling Holders to be sold to the proposed Transferee for the same price and on the same terms and conditions upon which the Selling Holders intend to sell their Shares by delivering written notice to the Selling Holders within six Business Days after delivery of the Participation Notice. A full-text copy of the Stockholders Agreement is available for free at http://ResearchArchives.com/t/s?169f Moreover, the Debtors notified the Court that these individuals have been selected to serve on the Initial Board of Directors of Reorganized Meridian from and after the Effective Date: * Richard E. Newsted, who joined Meridian in May 2001 and was appointed president and chief executive officer of the company in October 2005. * Duncan H. Cocroft, who was the former executive vice president for finance and treasurer of Cendant Corporation and PHH Corporation. * Allan B. Miller, who is a senior counsel in the Business Finance & Restructuring department of Weil, Gotshal & Manges LLP. Mr. Miller has concentrated in business reorganizations for 40 years. * Jeffrey M. Stafeil, a certified public accountant who also holds a Bachelor of Science degree in accounting and a Master of Business Administration degree. * Steve Zelin, a senior managing director in the Restructuring & Reorganization Advisory Group of The Blackstone Group. Resolved Objections The Debtors asserted that the 4th Amended Plan provides them with a stronger capital structure with less leverage and more liquidity, preserves their core operations and provides them with the opportunity to compete and grow in the automotive industry. The Plan complies with the requirements of Section 1129 of the Bankruptcy Code, the Debtors contended. The Plan should be approved despite the objections filed against it, the Debtors maintain. The Debtors informed the Court that they have resolved the Plan objections of the U.S. Trustee and JSP Mold LLC. The revised Plan filed with the Court on Dec. 4, 2006, included revised Plan language in response to the points raised the U.S. Trustee's and JSP Mold, the Debtors told Judge Walrath. The Debtors are engaged in discussions with the Internal Revenue Service and The Dow Chemical Company regarding the resolution of their Plan objections. The Debtors, however, believed that the proposed language contained in their proposed Confirmation Order filed on Dec. 4, 2006, will resolve those objections. On the other hand, Visteon Corporation's Plan objection is simply a thinly veiled objection to the relief sought in its Assumption/Rejection Motion and should be resolved in the context of that Motion, not confirmation, the Debtors argue. Visteon's objection is without merit and should be overruled, the Debtors maintain. Moreover, based on the Debtors' financial projections, the assumptions underlying those Projections, the various financing transactions contemplated by the Plan, current business and economic conditions, and the information provided by the Debtors, Stephen Sieh concludes that confirmation of the Plan is not likely to be followed by liquidation or the need for further financial reorganization of the Debtors or any of their successors. Mr. Sieh is a director in the Restructuring Group at Lazard & Freres & Co. LLC, the Debtors' financial and restructuring advisors. Headquartered in Dearborn, Mich., Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MOSAIC COMPANY: Fitch Affirms BB- Issuer Default Rating ------------------------------------------------------- Fitch Ratings affirmed and removed The Mosaic Company from Rating Watch Evolving, where it was originally placed on July 26 of this year. Fitch also assigned ratings to new issues after Mosaic's refinancing completed late last week. Fitch's rating actions affect approximately $2.5 billion of outstanding debt, including the undrawn $450 million revolving credit facility and $1.06 billion of term debt. The Rating Outlook is Stable. Affirmed: * The Mosaic Company -- Issuer Default Rating at 'BB-'; -- Senior secured revolver rating at 'BB+'. * Mosaic Global Holdings -- IDR at 'BB-'; -- Senior unsecured notes at 'BB'; --Senior unsecured notes and debentures at 'BB-'. * Phosphate Acquisition Partnership LP -- IDR at 'BB-'; -- Senior secured note rating at 'BB-'. Rating withdrawn: * Mosaic Global Holdings -- senior secured term loan rating at 'BB+'. Assigned: * The Mosaic Company -- Senior secured term loans rating 'BB+'; and -- Senior unsecured notes rating 'BB' * Mosaic Colonsay ULC -- IDR 'BB-'; and, -- Senior secured term loan rating 'BB+'. An IDR of 'BB-' for Mosaic and its issuing subsidiaries reflects the company's good market positions in the global potash and phosphate markets, and its improving earnings profile. The ratings continue to be tempered by Mosaic's high debt level and modest cash flow. Fitch anticipates an improvement in cash flow over the next year as changes to the phosphate cost structure become apparent; however, the amount of cash flow improvement remains uncertain. Additionally, market dynamics favor an increase in domestic fertilizer demand next spring while tightening global potash supply could support higher pricing. Fitch forecasts that Mosaic's operating EBITDA-to-gross interest expense could remain just under 4x while total debt-to-operating EBITDA declines to 3.5x for its fiscal year 2007 with modest earnings improvement, stronger cash flow and some debt reduction. The 'BB+' rating on Mosaic's proposed senior secured term loans reflects the superior collateral coverage. The rating is equal to that of Mosaic's existing revolver which would share in the same collateral package. The 'BB' rating on Mosaic's new 7.375% senior notes due 2014 and 7.625% senior notes due 2016 is one notch higher that the IDR of 'BB-' due primarily to the notes' guarantees from domestic and certain foreign subsidiaries. The rating also reflects the new notes senior unsecured position relative to a substantial amount of senior secured debt upon the closing of the refinancing. In a worst case scenario, senior secured debt could be as high as $1.5 billion, assuming a fully drawn revolver, compared to approximately $1.4 billion of unsecured debt. The IDR of 'BB-' at Mosaic Colonsay reflects its position as a wholly-owned subsidiary of Mosaic. The 'BB+' rating on Mosaic Colonsay's existing term loan reflects its collateral position. This term loan would share the credit facility collateral with the revolver and new term loans at parent Mosaic. The Stable Rating Outlook reflects Fitch's expectation for modest improvement in earnings and cash flow which will allow for the start of debt reduction over the next twelve months. Improving global fertilizer industry dynamics and anticipated cost improvements in Mosaic's phosphate business support Fitch's view on improving cash flow and the likelihood of modest debt reduction near term. The Mosaic Company is a global supplier of phosphate and potash fertilizers. Mosaic earned approximately $655.9 million in EBITDA on $5.2 billion in revenue LTM Aug. 31, 2006; the company had $2.6 billion in debt at that time. NEWMARKET CORP: S&P Rates New $150 Million Senior Notes at BB ------------------------------------------------------------- Standard & Poor's Ratings Services raised its senior unsecured debt rating on Richmond, Virginia-based NewMarket Corp. to 'BB' from 'BB-', and assigned its 'BB' rating to the company's proposed new issue of $150 million of senior notes due 2016. Standard & Poor's also affirmed its 'BB' long-term corporate credit rating on NewMarket. The outlook remains stable. "The upgrade reflects prospects for a continuation of only modest amounts of priority debt," said Standard & Poor's credit analyst Wesley E. Chinn. Proceeds from the debt offering will be used to refinance $150 million of notes due 2010. The ratings reflect the company's focus on the highly competitive, mature global petroleum additives industry, exposure to volatile raw material costs, and slightly aggressive financial policies. These negative factors are tempered by well-entrenched market positions in niche product areas, satisfactory liquidity, and cash flow protection measures which have achieved levels strong for the ratings. The petroleum additives segment generates about $1.2 billion in sales. The company's ability to develop products that meet increasing performance requirements, patent protection for existing products, and good geographic diversity of sales should help sustain significant market positions in fuel additives and driveline additives, and lesser shares in engine oil additives and industrial additives. These strengths are mitigated by competitive conditions in the lubricant additives submarket, where NewMarket's three major competitors are considerably larger and have substantial financial resources to fund R&D costs to meet new product specifications required by auto and diesel engine manufacturers. The fuel additives submarket has more competitors, so NewMarket's broad product offerings are a plus. A meaningful percentage of overall profitability is derived from industrial additives, where key drivers in a highly fragmented market are domestic GDP and industrial production. An ongoing challenge for participants in the petroleum additives industry is implementing timely, satisfactory price increases, particularly during periods of escalating raw material costs. High R&D and testing costs, keen price competition, and limited volume growth in industrialized countries create formidable barriers for new entrants to the lubricant additives industry, but also increase the challenge of improving prices and earnings for industry players. Net income for 2006 is up significantly from the prior year, reflecting improvements in sales and operating profits across all major petroleum additives product lines. Favorable financial comparisons are predominately the result of higher selling prices, with increased shipments and a better product mix also beneficial. Despite escalating raw material costs for most of the year, operating margins before depreciation and amortization for 2006 should be roughly on par with the 11% for 2005. NORAMPAC INC: Moody's Places Low-B Ratings Under Review ------------------------------------------------------- Moody's Investors Service placed under review for possible downgrade Cascades Inc.'s Ba2 corporate family rating, its Baa3 senior secured rating, and its Ba3 senior unsecured rating. At the same time, Moody's placed under review, with direction uncertain, Norampac Inc.'s Ba3 corporate family rating, its Ba1 senior secured rating, and its B1 senior unsecured rating. The reviews were prompted by the report that Cascades will purchase the 50% of Norampac that it does not already own from Domtar Inc., for a purchase price of CDN$560 million. Cascades also reported that the transaction will be paid for with the proceeds of an up to CDN$200 million offering of common shares through a subscription receipt offering, a concurrent Cdn$50 million offering of common shares, and debt. The review for possible downgrade of Cascades reflects the incremental debt of CDN$310 million to CDN$360 million that will be taken on to complete the acquisition. The review of Norampac with direction uncertain reflects that its existing ratings may go up or down depending on the final legal and capital structure of the two companies. Ratings under Review for possible downgrade: * Cascades Inc. -- Corporate Family Rating at Ba2, LGD4, 69% -- Senior Unsecured at Ba3, LGD4, 69% -- Senior Secured at Baa3, LGD2, 15% Ratings under Review (direction uncertain): * Norampac Inc. -- Corporate Family Rating at Ba3, LGD5, 74% -- Senior Unsecured at B1, LGD2, 69% -- Senior Secured at Ba1, LGD2, 15% The review will focus on: -- the amount of debt taken on by Cascades to complete the acquisition; -- Cascades' plan, if any, to reduce acquisition debt from internally generated cash flow, the timeframe involved, and Moody's view of the ability of the company to do so; and, -- the final legal and capital structure of the combined companies and whether any of the existing or new debt is structurally subordinated. This analysis of the legal and capital structure will have an impact on notching only, and not on the corporate family rating. The last rating action on Cascades was an affirmation of its Ba2 coprorate family rating in June 2006. The last rating action on Norampac was a downgrade of it corporate family rating to Ba3 in June 2006. Cascades Inc. is a Kinsey Falls, Quebec-based packaging and paper company producing boxboard, containerboard, specialty packaging products and tissue. Consolidated revenues in 2005 were CDN$3.5 billion. Norampac Inc. is a Montreal based containerboard producer that had revenue in 2005 of CDN$1.3 billion. NVIDIA CORP: Delayed Form 10-Q Filing Cues S&P to Remove Watch -------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Santa Clara, California-based Nvidia Corp. from CreditWatch, where they were placed with negative implications on Aug. 15, 2006. The corporate credit rating is affirmed at 'BB-'. The outlook is stable. "The ratings actions follow the company's delayed filing of its 10-Q for the quarter ended July 30, 2006," said Standard & Poor's credit analyst Lucy Patricola. The company is in full compliance with all SEC filing requirements. Additionally, the company has concluded its special investigation into its stock-option practices. The results of the investigation consist of an aggregate noncash, stock-based compensation charge of $127.4 million, from 2001 to Jan. 31, 2006, primarily on improper measurement dates for annual stock-option grants. The stock-option review concluded that there were no causes for concern about the integrity of current management or director. Still, an SEC investigation remains open and numerous shareholder lawsuits have been filed. The ratings on Nvidia reflect a narrow business profile, challenging competitive landscape, and frequent product introductions. These are only partly offset by the company's good technology position in high performance graphics markets and its good liquidity. Nvidia had no funded debt outstanding as of July 30, 2006. Nvidia competes in a small subsegment of the semiconductor industry, designing graphics processors used in desk-top and notebook computers and handheld devices. The components are sold to consumers, as an add-in card, to computer OEMs, or in partnership with Intel or AMD for an integrated chipset. About two-thirds of revenues and all of its operating income are generated from the sale of its processors to consumers and OEMs for desktop, notebook or professional workstations. OMNI INSURANCE: A.M. Best Removes Rating from Review & Downgrades ----------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B+ (Very Good) from A- (Excellent) of Omni Insurance Group (Georgia). The rating has been removed from under review with negative implications and assigned a stable outlook. The rating reflects Omni's adequate capitalization and regional market presence as a nonstandard automobile writer. Somewhat offsetting these positive rating factors is the group's unfavorable operating performance over the last five years, which was driven by historically adverse loss reserve development and increased claim frequency and severity. The rating further reflects The Hartford Financial Services Group's recent sale of Omni Insurance Group, Inc. to Independent Insurance Investments, Inc., the parent of American Independent Companies (AIC). Omni's geographic footprint is expected to broaden AIC's predominant northeast market presence. Concurrently, it allows Omni the opportunity to continue with its niche focus of providing automobile insurance to the nonstandard marketplace, consistent with AIC's market strategy. Partially offsetting these positive rating factors is the execution and integration risk associated with this transaction. In addition, the rating acknowledges Omni's historical unfavorable operating performance; however, this is somewhat tempered by Omni's anticipated ability to become increasingly efficient under its new ownership structure as part of AIC. The FSR of A- (Excellent) has been downgraded to B+ (Very Good) for the following property/casualty members of the Omni Insurance Group: -- Omni Insurance Company -- Omni Indemnity Company A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. ORAGENICS INC: Incurs $559,160 Net Loss in Quarter Ended Sept. 30 ----------------------------------------------------------------- Oragenics Inc. reported a net loss of $559,160 for the third quarter ended Sept. 30, 2006, compared with a net loss of $751,172 for the same quarter in 2005. Revenue for the 2006 third quarter was $66,176, which is associated to a Small Business Innovation Research grant. For the comparable quarter in 2005 the company did not generate any revenue. The company's balance sheet at Sept. 30, 2006, showed total assets of $1.4 million, total liabilities of $325,320 and total stockholders' equity of $1.1 million. A full text-copy of the company's quarterly report on Form 10-Q may be viewed at no charge at http://ResearchArchives.com/t/s?1691 Going Concern Doubt As reported in the Troubled Company Reporter on March 20, 2006, Kirkland Russ Murphy & Tapp, PA, expressed substantial doubt Oragenics, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2005. Ernst & Young LLP, Oragenics Inc.'s former independent auditors also expressed substantial doubt Oragenics' ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2004. About Oragenics Headquartered in Alachua, Florida, Oragenics, Inc., is a biotechnology company aimed at adding value to novel technologies and products sourced from innovative research at the University of Florida and other academic centers, as well as discovered internally. The Company's strategy is to in-license or internally discover and to develop products through human proof-of-concept studies (Phase II clinical trials of the U.S. Food and Drug Administration's (FDA) regulatory process) prior to partnering with major pharmaceutical, biotechnology or healthcare product firms for advanced clinical development and commercialization. PACER HEALTH: Earns $4.3 Million in 2006 Third Quarter ------------------------------------------------------ Pacer Health Corp. reported $4.3 million of net income on $3.2 million of total revenues for the third quarter ended Sept. 30, 2006, compared with $103,625 of net income on $3.3 million of revenues for the same period in 2005. The increase in net income is primarily the result of the gain on sale of the company's skilled nursing facility of $2.2 million and the gain on the sale of majority interest in Southpark Community Hospital, L.L.C. of $4.4 million, offset by the recognition of a change in the fair market value of derivatives related to the convertible debenture of $347,211. At Sept. 30, 2006, the company's balance sheet showed $8.9 million in total assets and $9.8 million in total liabilities, resulting in an $885,146 total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $3.7 million in total current assets available to pay $6.5 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the third quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?168b About Pacer Health Corporation Miami, Nev.-based Pacer Health Corporation (OTCBB: PHLH) -- http://www.pacerhealth.com/-- owns and operates medical treatment centers and acute care facilities, primarily serving the growing senior citizen population and low-to-moderate income individuals. PLATFORM LEARNING: Excl. Plan-Filing Period Intact Until Dec. 31 ---------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York extended until Dec. 31, 2006, Platform Learning Inc.'s exclusive period to file a Chapter 11 Plan of Reorganization. In his order, Judge Drain ruled that the Debtor's exclusive plan- filing period may be extended until Jan. 17, 2007, without further court hearing provided that the Debtor and its Official Committee of Unsecured Creditors submit a written stipulation for the extension no later than December 31. The Court also agreed to grant the Debtor an additional 60 days to solicit acceptances for its plan beginning on the plan-filing exclusivity extension date. As reported in the Troubled Company Reporter on Oct. 26, 2006, The Debtor needed additional time to explore development of a plan that will insure continuity of services to the students it serves. As reported in the Troubled Company Reporter on Oct. 26, 2006, the Debtor had already: a. completed its significant downsizing, b. closed and jettisoned unnecessary office leaseholds to the direct benefit of the Debtor's estate, c. worked through a contemplated expedited sale process, d. converted the sale process to new DIP financing and renewed efforts towards a confirmable Plan, and e. maintained operations allowing it to continue providing tutorial services to schoolchildren in the new school year. Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through its Learn-to-Succeed tutoring program to students attending public schools. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at Herrick Feinstein LLP represent the Debtor in its restructuring efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. PLATFORM LEARNING: Judge Drain Approves $4.8MM DIP Loan Facility ---------------------------------------------------------------- The Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has issued a final order allowing Platform Learning Inc. to obtain up to $4.8 million of debtor-in- possession loans from Ascend Ventures II L.P., Ascend Ventures NY II, L.P., and Blue Wolf Education Capital, LLC. As security for any borrowings under the DIP credit facility, the lenders are granted valid, binding, enforceable and perfected liens in all of the Debtor's assets. These liens are senior and superior to any other lien or claim encumbering these assets pursuant to section 364(d)(1) of the Bankruptcy Code. PLAC Inc. also agrees to guaranty the Debtor's DIP loan obligations on a limited recourse basis, with such guaranty being secured by a first priority lien on all of its assets and equity. Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through its Learn-to-Succeed tutoring program to students attending public schools. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at Herrick Feinstein LLP represent the Debtor in its restructuring efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. PRC LLC: S&P Rates Proposed $150 Mil. First-Lien Facilities at BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating and stable outlook to business process outsourcer PRC LLC. At the same time, Standard & Poor's assigned a bank loan rating of 'BB-', one notch above the corporate credit rating, and recovery rating of '1' to PRC's proposed $150 million first-lien credit facilities, indicating a high expectation of full recovery of principal in the event of a payment default. The first-lien credit facilities consist of a $20 million revolving credit facility due 2012, a $25 million delayed-draw credit facility due 2013, and a $105 million term loan B due 2013. Standard & Poor's also assigned a 'B-' bank loan rating, two notches lower than the corporate credit rating, and recovery rating of '4' to the company's $55 million second-lien term loan due 2014, indicating an expectation of marginal recovery of principal in the event of a payment default. Proceeds from the transaction will be used to fund Diamond Castle Holdings LLC's acquisition of PRC from IAC/InterActiveCorp. Pro forma for the proposed transaction, total debt outstanding was $182 million, including $22 million in holding company 14% pay-in- kind notes due 2015, as of Sept. 30, 2006. Plantation, Florida-based PRC is a business process outsourcing provider with operations in the U.S., the Philippines, India, the Dominican Republic, and Ireland. The company provides dedicated- agent communication services focusing on business-to-consumer and business-to-business transactions. "The ratings reflect PRC's significant revenue concentration among its top customers, high debt leverage following the buyout, and the competitive BPO market," said Standard & Poor's credit analyst Andy Liu. "Also, we are concerned about uncertain long-term opportunities for cost reduction, and the presence of several larger and better capitalized competitors." These factors are only partially offset by good revenue visibility from multiyear contracts and good BPO industry growth prospects. PURADYN FILTER: Sept. 30 Balance Sheet Upside-Down by $5.2 Million ------------------------------------------------------------------ puraDYN Filter Technologies Inc. posted a $639,275 net loss on $641,303 of net revenues for the three months ended Sept. 30, 2006, compared to a $800,316 net loss on $538,443 of net revenues for the same period in 2005. At Sept. 30, 2006, the company's balance sheet showed $2.3 million in total assets and $7.5 million in total liabilities, resulting in a $5.2 million stockholders' deficit. A full-text copy of the company's quarterly report is available for free at http://researcharchives.com/t/s?1690 On Sept. 14, 2006, the company issued a confidential private placement offering, with a purchase price of $0.70 per share of common stock. Each four shares purchased with entitle the purchaser to receive common stock purchase warrants to purchase one share of common stock at an exercise price of $1.25 on or prior to Oct. 1, 2011. As of Nov. 14, 2006, the Company had received gross proceeds of approximately $1.332 million for an aggregate of 1,902,856 shares of common stock. Going Concern Doubt DaszkalBolton LLP in Boca Raton, Florida, raised substantial doubt about puraDYN Filter Technologies, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring operating losses, stockholders' deficit, and reliance on cash inflows from an institutional investor and current stockholder. About puraDYN Filter Technologies Based in Boynton Beach, Florida, puraDYN Filter Technologies, Inc. -- http://www.puradyn.com/-- designs, manufactures and markets the puraDYN(R) Bypass Oil Filtration System. The Company's patented and proprietary system is effective for internal combustion engines, transmissions and hydraulic applications. RAPID PAYROLL: Disclosure Statement Hearing Slated for December 13 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California has set 10:00 a.m. on Dec. 13, 2006, to consider the adequacy of the disclosure statement explaining Rapid Payroll Inc.'s Plan of Reorganization. The hearing will be held at the Ronald Reagan Federal Building, Courtroom 5B, 411 W. Fourth Street in Santa Ana, California. The Debtor relates that as of Sept. 30, 2006, it had cash on hand in the sum of $3,336,678.41. The Debtor says it has obtained the commitment of its affiliates to fund the difference between its cash on hand and the amounts necessary to fund the Plan. Terms of the Plan Administrative expenses and priority tax claims will be paid in full. General unsecured claims of employee claimants will receive cashed out accrued vacation, plus severance of $102,000. They will also get a stay bonus of $42,000 for continuing to work for the Debtor through the conclusion of all distributions under the Plan. With the exception of affiliate Paychex of New York, LLC, general unsecured claims of licensee claimants will get 100% of allowable amounts of their claims. PONY will defer receipt of its claim until all other claimants have been paid. Paychex, Inc., the 100% owner of the Debtor, will retain its prepetition interest in the Debtor. A full-text copy of the Debtor's Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=061207203718 About Rapid Payroll Headquartered in Orange, California, Rapid Payroll Inc. fka Olsen Computer Systems, was in the business of licensing payroll processing software called Rapidpay and providing maintenance, support and updates for the software to its licensees. The Company was later acquired in November 1996 by Paychex, Inc. Rapid Payroll filed for chapter 11 protection on May 4, 2006 (Bankr. C.D. Calif. Case No. 06-10631). The firm of Robinson, Diamant & Wolkowitz, APC serves as the Debtor's counsel. On June 28, 2006, the Court authorized the Debtor to hire the firm of Irell & Manella LLP as its special litigation counsel through and including August 31, 2006. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. REFCO INC: Ch. 11 Trustee Wants RCM's Case Converted to Chapter 7 ----------------------------------------------------------------- Marc S. Kirschner, the Chapter 11 Trustee of Refco Capital Markets, Ltd., asks the U.S. Bankruptcy Court for the Southern District of New York to convert RCM's chapter 11 case to a chapter 7 liquidation proceeding. Timothy B. DeSieno, Esq., at Bingham McCutchen LLP, in New York, relates that in March 2006, the Court issued a preliminary ruling that RCM is a stockbroker subject to Subchapter III of Chapter 7. The Court deferred entry of a conversion order, finding that there were "unusual circumstances" that might militate against conversion, at least at that time, he says. Instead, Mr. DeSieno continues, the Court appointed the RCM Trustee to maximize RCM's asset values while he and the other parties-in-interest sought to globally resolve Refco, Inc. and its debtor-affiliates' Chapter 11 cases. Within three months, the RCM Trustee had brought the major RCM securities customers and general unsecured creditors to consensus on a settlement of their pending disputes. Mr. DeSieno states that the core of the litigation over the RCM estate has been subsequently resolved, the settlement has been approved, and the RCM Trustee, the other debtors, and the official creditors committees in the Refco cases have co-proposed a global plan of reorganization. Plan Implementation Through RCM Conversion The Plan incorporates, by reference, the terms and conditions of the RCM Settlement Agreement. Specifically, the Plan requires a confirmation by Dec. 15, 2006, and an effective date to occur no later than Dec. 31, 2006. Consistent with the Preliminary Conversion Ruling, the RCM Settlement resolves disputed issues surrounding possible application of Chapter 7 to RCM's estate. The RCM Settlement also contemplates that it may be effectuated through the conversion of RCM's Chapter 11 case. In addition, the proposed Plan contemplates that RCM's case will be converted to Subchapter III of Chapter 7, unless the Debtors and the RCM Trustee agree that the RCM estate should be administered under Chapter 11. Mr. DeSieno tells Judge Drain that the planned sequencing is that the Conversion Motion would be heard and RCM's case would be converted after the Plan confirmation, with conversion of RCM's case as part of the Plan's means of implementation. However, the RCM Trustee reserves the right to proceed with the Motion, or to withdraw the Motion in whole or in part, regardless of whether and when the Plan is confirmed. Mr. DeSieno says the RCM Settlement was designed with the distributive rules of Subchapter III of Chapter 7 and related preference recoveries in mind. Subchapter III of Chapter 7 appears likely to be the most efficient path to carry out that distribution and recovery scheme, he notes. Mr. DeSieno relates that the RCM Settlement's conditions precedent to full effectiveness include that either: (i) a plan that incorporates the RCM Settlement be confirmed and become effective; or (ii) in the absence of a confirmed and effective plan, RCM's Chapter 11 case be converted to a case under Subchapter III of Chapter 7, in each case, before January 15, 2007. The RCM Trustee asserts that the Conversion Motion effectively "pre-packages" three important aspects of a Subchapter III case, in that the requr: (1) preserves and continues the RCM Chapter 7 trustee's ability to maximize the value of the RCM estate, dealing with sales of the RCM portfolio under the Court's previous orders in the Chapter 11 case, rather than arguably being required to "reduce the assets to money" as soon as practicable; (2) includes provisions that effectuate the inter-estate distributive rules contained in the Plan, if confirmed, as between the RCM estate and the estates of the other Debtors; and (3) includes procedural requirements and clarifications that maximize the efficiency of the conversion process and minimize the delay that the Chapter 7 conversion might otherwise have caused. Applicability of Plan Provisions The RCM Trustee also asks the Court to extend the applicability of the Plan provisions to the RCM Trustee or RCM Chapter 7 trustee, as applicable, by granting to either trustee, as the case may be, authority to: -- resolve disputed claims on certain terms and conditions, consistent with the authority provided for the Plan Administrator in the Plan; -- address executory contracts to which RCM is a party on the terms and conditions; and -- seek expedited tax determinations under Section 505(b). The RCM Trustee proposes a Court hearing on his request during the Plan confirmation hearing on December 15, 2006. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). REFCO INC: BDO Stoy Appointed as Refco Trading's Liquidator ----------------------------------------------------------- Simon Michaels and Malcom Cohen of BDO Stoy Hayward LLP were appointed Joint Liquidators of Refco Trading Services Ltd. at the company's Extraordinary Meeting on Aug. 22 for the members' voluntary winding-up procedure. The Company's Directors made a Statutory Declaration that: -- a full inquiry has been launched into the Company's affairs; and -- the Company would be able to pay its debts in full within 12 months from the commencement if the winding-up. The Joint Liquidators can be reached at: BDO Stoy Hayward LLP 8 Baker Street London W1U 3LL Phone: 020 7486 5888 Fax: 020 7487 3686 E-mail: london@bdo.co.uk Web: http://www.bdostoyhayward.co.uk/ About BDO Stoy BDO Stoy Hayward -- http://www.bdo.co.uk/-- focuses on business assurance (audit), corporate advisory, tax, and investment management services, specializing in such industries as charities, educational institutions, family businesses, financial services, leisure, and hospitality. The company is the U.K. arm of BDO International and has offices in more than 15 cities throughout the U.K. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). REVLON CONSUMER: S&P Junks Rating on New $840 Million Senior Debt ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its loan and recovery ratings to New York, New York-based Revlon Consumer Products Corp.'s new $840 million senior secured term loan due 2012. The loan rating is 'CCC+', with a recovery rating of '2', indicating the expectation for substantial recovery of principal in the event of a payment default. At the same time, Standard & Poor's affirmed its existing ratings on Revlon, including the 'CCC+' corporate credit rating. The rating outlook is negative. In addition to the proposed term loan facility, Revlon also reported that it intends to increase the size of its previously planned $75 million rights offering to $100 million. McAndrews & Forbes is committed to purchasing its 60% pro rata share of the equity covered by the offering. M&F will also backstop up to $75 million of the offering, and will continue to provide an additional $50 million line of credit through January 2008. The bank refinancing is expected to close in December 2006, and the rights offering is expected to be completed in January 2007. Proceeds from the new term loan facility will be used to refinance Revlon's existing $800 million term loan facility, and the balance will be available for general corporate purposes after the repayment of transaction related fees and expenses. Proceeds from the rights offering will be used to repay $50 million of its 8.625% subordinated notes due in 2008, with the remainder used to pay down its existing revolver balance after fees and expenses. At Sept. 30, 2006, the company had about $1.465 billion in total debt outstanding and, on a pro forma basis, it is expected to have about $1.404 billion of total debt outstanding at the closing of the bank refinancing and rights offering. RFMSI: S&P Junks Rating on Class B-2 Debt and Removes Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B-2 mortgage-backed securities from RFMSI Series 2003-S3 Trust to 'CCC' from 'B'. Concurrently, the rating is removed from CreditWatch, where it was placed with negative implications on Nov. 14, 2006. The downgrade reflects $145,000 in losses for the transaction on the Nov. 25, 2006, distribution, which wiped out most of the current credit support, leaving just $20,242 available. Credit support is provided by subordination. Total delinquencies were 0.21% of the current pool balance. The class B-2 rating is removed from CreditWatch negative because according to S&P's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch. The mortgage pool consists of fixed-rate, conventional mortgage loans secured by first liens on one- to four-family residential properties. Rating Lowered And Off Creditwatch Negative RFMSI Series 2003-S3 Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-S3 B-2 CCC B/Watch Neg SAXON CAPITAL: Moody's Lifts Senior Unsecured Debt's Rating ----------------------------------------------------------- Moody's Investors Service raised Saxon Capital Inc's senior unsecured debt rating to A1, from B2 and withdrew the REIT's corporate family rating. This rating action comes after the completion of Saxon's acquisition by Morgan Stanley Mortgage Capital Inc, a direct, wholly-owned subsidiary of Morgan Stanley. Moody's said that the rating upgrade reflects strategic ownership of Saxon by a large, diversified financial services firm with ample access to capital. Because Morgan Stanley is not providing any form of explicit support to Saxon's debtholders, Saxon's debt has been notched one level below Morgan Stanley's existing senior unsecured rating of Aa3. The rating outlook for Saxon's securities is stable. Moody's last rating action with respect to Saxon Capital, Inc. was taken on Aug. 9, 2006. This rating was upgraded: * Saxon Capital, Inc. -- Senior unsecured debt to A1, from B2 This rating was withdrawn: * Saxon Capital, Inc. -- Corporate family rating at B1 Saxon Capital, Inc. is a mortgage REIT headquartered in Glen Allen, Virginia, USA, that invests in and services subprime residential mortgages. At Sep. 30, 2006, Saxon had assets of $7.6 billion. SEA CONTAINERS: GNER's UK East Coast Operation Franchise Ceased --------------------------------------------------------------- The British Government ended Great North Eastern Railway's GBP1,300,000,000 franchise agreement to operate the East Coast main line railway, London-based The Times reported. The U.K. Department for Transport will re-let the franchise but has agreed to allow GNER to run the line for up to two years on a new, fixed management-contract basis, as a temporary solution. In 1996, Sea Containers Ltd., GNER's parent, entered into a franchise agreement with the Strategic Rail Authority of the British Government to operate the GNER carrying passengers on high-speed trains along the East Coast main line in Great Britain, United Kingdom. Sea Containers and the Transport Department entered into a new 10-year contract in April 2005, under which the Debtor agreed to pay the British Government GBP1,300,000,000 over the course of the franchise. The Times reports that talks are underway between the Transport Department and Sea Containers to come up with terms for the new arrangement. Under the new arrangement, GNER is expected to continue running the East Coast line between 18 and 24 months until a new train operating company is selected. According to The Times, an agreement is expected given that GNER's financial situation is unsustainable under the terms of the current franchise. Christopher Garnett, GNER's former chief executive, had previously admitted that GNER had overbid. GNER is said to be close to breaching the liquidity ratio legally required to its franchise agreement, The Times relates. Headquartered in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported US$1.7 billion in total assets and US$1.6 billion in total debts. (Sea Containers Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SENIOR HOUSING: Stable Performance Prompts S&P to Hold BB+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit and senior unsecured debt ratings assigned to Senior Housing Properties Trust. These actions affect $342.5 million of rated securities. The outlook is stable. "The ratings reflect the significant tenant concentration within the portfolio and the company's external advisory structure, acknowledging the improved performance of SNH's largest tenant and the company's comparatively judicious approach to growing the business and managing its balance sheet," explained Standard & Poor's credit analyst George Skoufis. "Further supporting the ratings are the company's stable portfolio performance, conservative balance sheet, strong debt protection measures, and moderate exposure to government reimbursement." The stable outlook reflects predictable rental income and a solid balance sheet, which continue to support debt protection measures. Moreover, stable property-level operating performance, an above- average level of private-pay facilities, and negligible lease rollover support rental income. Continued seasoning, improved operating performance, and a stronger balance sheet at operator Five Star Quality Care Inc., or improved tenant diversity, would drive positive rating momentum. Ratings would be negatively affected if SNH meaningfully increases its exposure to Five Star or aggressively pursues investments that negatively affect the overall credit profile. SPECTRUM BRANDS: Fourth Quarter Net Loss Increases to $439.4 Mil. ----------------------------------------------------------------- Spectrum Brands Inc. reported a $439.4 million net loss for the fourth quarter ended Sept. 30, 2006, compared with a $2.9 million net loss for the same period in 2005. The company's 2006 fourth quarter net sales were $608.4 million, a 4% increase over the comparable period last year. Organic growth in the quarter was 3% and foreign exchange rates added 1%. Global battery sales increased 2% year over year, as strong results from North America and Latin America more than offset a decline in Europe/ROW sales. Global Pet reported good growth of 7%. Home and Garden sales increased by 8%. Sales of Remington branded products declined by 2% on a worldwide basis. Commenting on the results, Dave Jones, the company's chairman and chief executive officer, said, "Our fourth quarter results were encouraging and show marked improvement in revenue trends in a number of key areas, including North American battery sales, Global Pet, and Home & Garden. While hard work remains ahead of us, we are pleased with the progress we are seeing throughout the company despite a challenging environment. We remain committed to further reducing costs while making the necessary investments to transform our business for long-term success." Included in the company's quarterly results are: -- a non-cash pretax impairment charge of $433 million related to the value of certain trade names and goodwill carried on the company's books. This charge resulted from an annual evaluation of goodwill and indefinite-lived intangibles as required by SFAS 142, "Goodwill and Other Intangible Assets," -- a non-cash charge in the amount of $18.9 million increasing the valuation allowance against certain net deferred tax assets, and -- pre-tax restructuring and related charges of $28.8 million related to the rationalization of the company's European business and ongoing integration activities resulting primarily from the 2005 acquisitions of United Industries and Tetra Holding GmbH. Gross profit and gross margin for the quarter were $210.8 million and 34.6%, respectively, versus $215.4 million and 36.7% for the same period last year. Current year cost of goods sold included $18 million in restructuring and related costs; fiscal 2005 cost of goods sold included $2.7 million in restructuring and related costs and a $2.6 million inventory valuation allowance. Increased raw material costs in the quarter were offset by improved margins in Remington branded products and the benefit of integration cost savings. The company's operating loss for the quarter was $423.2 million versus fiscal 2005's fourth quarter operating income of $32.8 million. The primary reasons for the decline are the $433 million impairment charge and $28.8 million in restructuring and related charges taken in fiscal 2006 versus $13.6 million of restructuring and related charges and inventory valuation charges in fiscal 2005. Significantly higher distribution costs also contributed to the increase in operating expenses. For the year ended Sept. 30, 2006, the company recorded a net loss of $434 million compared with net earnings of $46.8 million last year. Included in the current year's results are: -- restructuring and related charges of $56.1 million primarily related to the integration of acquisitions and the company's European restructuring programs, -- the aforementioned non-cash asset impairment charge of $433 million -- the aforementioned non-cash charge increasing the valuation allowance for certain net deferred tax assets in the amount of $18.9 million, -- a gain on sale of assets of $7.9 million, and -- other non-cash benefits totaling $1.0 million. The net impact of these items is a decrease in the current year's net earnings of $499.1 million. Fiscal 2005 results included: -- inventory valuation charges of $37.5 million related to the acquisitions of United Industries and Tetra Holding GmbH, -- restructuring and related charges of $26.3 million primarily related to the integration of acquisitions, -- debt issuance costs write-off of $12.0 million, -- income from discontinued operations of $5.5 million, and -- other non-cash benefits totaling $0.5 million. The net impact of these items is a decrease in fiscal 2005 net earnings of $69.8 million. Net sales for fiscal 2006 of $2.55 billion represented an increase of $244.6 million, as a result of the acquisitions of United Industries, acquired on Feb. 7, 2005, Tetra Holding GmbH, acquired on April 29, 2005, and Jungle Labs, acquired on Sept. 1, 2005. Excluding the impact of acquisitions on current year results, net sales declined 4%, primarily a result of weakness in battery sales in Europe and North America. The operating loss for the year was $283.2 million. In addition to the restructuring and related charges and other costs, 2006 operating loss was negatively affected by significantly increased raw material and distribution costs. Fourth Quarter Segment Results North American net sales were $257.8 million, a 5% improvement compared with $246.5 million reported last year. The increase was driven by strong growth in batteries and in home and garden sales, somewhat offset by a decline in Remington branded products. Battery sales were up significantly, largely due to the successful launch of Rayovac's new Power Challenge marketing campaign. In the company's home and garden business, consumer purchases of Spectrum Brands products at retail grew 8% during the fourth quarter, in line with reported results. North American segment profits were $20.5 million versus $17.5 million reported last year. European/ROW net sales were $143 million versus $153.8 million in the prior year. Foreign exchange translation contributed $5.2 million. Remington branded product sales showed strong growth, but this growth was more than offset by continuing weakness in the battery category, particularly in Western Europe. Segment profitability for the quarter was $13.7 million compared with $21.2 million last year, primarily a function of lower battery sales volume and higher raw material costs. Latin America continued its positive 2006-operating trend with a quarterly net sales increase of 20% versus the prior year, benefiting from strong growth in both Rayovac batteries and Remington branded products. Latin America segment profitability was $9.1 million compared with $5.4 million last year as a result of increased sales and the positive impact of foreign currency translation. Global Pet segment net sales of $140.3 million represent a 7% increase in the quarter largely driven by robust growth from Tetra branded products. Global Pet segment profits were $21.2 million versus $17.1 million reported last year. Last year's profits included a $2.6 million inventory allowance charge. Corporate expenses were $25.9 million, or 4.3% of net sales, as compared with $17.4 million, or 3% of net sales, in the prior year period. The biggest contributor to the increase was the comparison to last year's fourth quarter compensation expense, which was reduced by a reversal of annual incentive bonus accruals. Corporate expense was also affected by the continuing expansion of the global operations support infrastructure in Asia. Fourth quarter interest expense was $47 million versus $39.5 million last year due to higher interest rates. Total debt at Sept. 30, 2006 was $2.277 billion. Asset Impairment Charge Statement of Financial Accounting Standards, "Goodwill and Other Intangible Assets" requires companies to test goodwill and indefinite-lived intangibles for impairment annually, or more often if an event or circumstance indicates that an impairment loss may have been incurred. In accordance with SFAS 142, Spectrum Brands, with the assistance of independent third party valuation specialists, conducted its annual impairment testing of goodwill and indefinite-lived intangible assets. The results using the discounted cash flow method were also tested for reasonableness by comparison to the market capitalization of the company. As a result of these analyses the company recorded a non-cash pretax impairment charge of approximately $433.0 million ($398.3 million, net of tax). The impairments will not result in any future cash expenditures. Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides. Spectrum Brands' products are sold by the world's top 25 retailers and are available in more than one million stores in 120 countries around the world. * * * As reported in the Troubled Company Reporter on Oct. 11, 2006, Moody's Investors Service confirmed Spectrum Brands Inc.'s B3 Corporate Family Rating in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given- Default rating methodology. SURGILIGHT INC: Posts $291,259 Net Loss in 2006 Third Quarter ------------------------------------------------------------- SurgiLight Inc. reported a $291,259 net loss on $25,000 of revenues for the third quarter ended Sept. 30, 2006, compared with a $546,442 net loss on $124,534 of revenues for the same period in 2005. The increase in net loss is due to the decrease in operating expenses from $625,671 in the third quarter ended Sept. 30, 2005, to $261,769 in the third quarter ended Sept. 30, 2006. At Sept. 30, 2006, the company's balance sheet showed $5 million in total assets, $4.7 million in total liabilities, and $315,074 in total stockholders' equity. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $733,127 in total current assets available to pay $4.7 million in total current liabilities. Full-text copies of the company's financial statements for the third quarter ended Sept. 30, 2006 are available for free at http://researcharchives.com/t/s?1684 Going Concern Doubt Richard L. Brown & Company, P.A., in Tampa, Florida, raised substantial doubt about SurgiLight's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's losses from operations and accumulated deficiency at Dec. 31, 2005. About SurgiLight SurgiLight, Inc. sells ophthalmic lasers and related products and services based on its own and licensed intellectual property, primarily for use in refractive and presbyopia procedures. TALLAGIUM CORP: Declares $1.2165 Dividend on Class B Shares ----------------------------------------------------------- Tallagium Corporation's Board of Directors has declared a special dividend of $1.2165 per share on its issued and outstanding Class B Non-Voting Common Shares. These Class 'B' Shares are payable as a $1.2165 per share payable Dec. 18, 2006, to shareholders of record at close of business on Dec. 11, 2006. The shares will be paid if any holders of Class B shares have agreed to waive their right to receive dividends, or have converted or have given notice to convert all or part of their Class B shares to Class A shares, then any dividends otherwise payable on such Class B shares shall be allocated pro- rata among the remaining holders of Class B shares and the holders thereof who have not otherwise waived their right to receive dividends. Based in Calgary, Alberta, Tallagium Corporation (TSX Venture:TAA) (TSX Venture:TAA.NV.B) operates in four key business segments: document sales, financing and administrative services, interest and commission fees. The company, through various wholly owned subsidiaries, sells fixed rate interest bonds, maintains and sells an inventory of legal, business and other documents and forms, and acts as an intermediary between third parties and various agents in relation to funds raised on behalf of the company. * * * As indicated in its interim, consolidated financial statements for the nine months ended Sept. 30, 2006, the company had $8,110,964 in total assets, $8,696,600 in total liabilities, and $585,636 stockholders' deficit. The company related that it has a history of working capital deficiencies and losses from operations, and is still dependent on investment income and on proceeds from new equity and debt financing. TEEKAY SHIPPING: Subsidiary Registers 7 Million Common Units ------------------------------------------------------------ Teekay Shipping Corporation's wholly owned subsidiary, Teekay Offshore Partners L.P., has filed a registration statement with the Securities and Exchange Commission for an initial public offering of 7,000,000 common units or 35% of its limited partner interest. The company disclosed that the offering will be increased to 8,050,000 common units if the underwriters exercise in full their over-allotment option. The common units have been approved for listing on the New York Stock Exchange, subject to official notice of issuance. Citigroup Corporate and Investment Banking and Merrill Lynch & Co. will act as joint book-running managers and as representatives of the underwriters, which include Morgan Stanley, A.G. Edwards, Deutsche Bank Securities, Raymond James, Simmons & Company International, DnB NOR Markets and Fortis Securities. A prospectus of the offering may be obtained from: Citigroup Corporate and Investment Banking Brooklyn Army Terminal 140 58th Street, 8th Floor Brooklyn, NY 11220 Attention: Prospectus Department Tel. No: (718) 765-6732 Fax: (718) 765-6734 Merrill Lynch & Co. 4 World Financial Center Attention: Prospectus Department New York, NY 10080 Tel. No: (212) 449-1000. The company further disclosed that a registration statement relating to the securities has been filed with the SEC but has not yet become effective. The securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. About Teekay Offshore Partners Teekay Offshore Partners L.P., a Marshall Islands partnership recently formed by Teekay, will provide international marine transportation and storage services to the offshore oil industry. Immediately following the closing of the offering, Teekay Offshore Partners will own a 26% interest in and control Teekay Offshore Operating L.P., a Marshall Islands limited partnership that will have a fleet of 36 shuttle tankers, four floating storage and offtake units and nine conventional crude oil Aframax tankers. Teekay Offshore Partners L.P. will also have rights to participate in certain floating production, storage and offloading opportunities involving Teekay Petrojarl ASA. About Teekay Shipping Corp. Headquartered in Nassau, Bahamas, Teekay Shipping Corporation (NYSE: TK) is a Marshall Islands corporation that transports seaborne oil and has expanded into the liquefied natural gas shipping sector through its publicly-listed subsidiary, Teekay LNG Partners L.P. (NYSE: TGP). With a fleet of over 145 tankers, offices in 17 countries and 5,100 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to oil and gas companies. * * * As reported in the Troubled Company Reporter on Sept. 7, 2006 Moody's Investors Service placed all debt ratings of Teekay Shipping Corporation under review for possible downgrade -- including its senior unsecured rating at Ba2. The review was prompted by Teekay's announcement that is has acquired more than 40% of Petrojarl ASA, and of its intent to make an offer for all of the remaining Petrojarl shares. Moody's changed the outlook to rating under review from stable. THERMOVIEW INDUSTRIES: Chap. 7 Trustee Wants Middleton as Counsel ----------------------------------------------------------------- Thomas W. Frentz, Esq., the chapter 7 trustee appointed in ThermoView Industries Inc. and its debtor-affiliates' liquidation proceeding, asks the U.S. Bankruptcy Court for the Western District of Kentucky, for permission to employ Middleton Reutlinger as his bankruptcy counsel, nunc pro tunc to Nov. 13, 2006. Middleton Reutlinger will: a) advise the Debtors in connection with corporate transactions; b) represent the Debtors in connection with litigation, if any, relating to preference recovery; c) appear before the Court, any district or appellate courts, any state courts, and the U.S. Trustee with respect to the matters referred to above; d) perform all necessary legal services and provide all necessary legal advice to the Debtors. The firm's professionals billing rates are: Designation Hourly Rate ----------- ----------- Partners $215 - $310 Associate $150 - $220 Legal Assistant & Support Staff $50 - $150 G. Kennedy Hall Jr., Esq., a member at the firm, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Hall can be reached at: G. Kennedy hall Jr. Middleton Reutlinger 2500 Brown & Williamson Tower Louisville, KY 40202 Tel: (502) 625-2818 Fax: (502) 561-0442 http://www.middreut.com/ Headquartered in Louisville, Kentucky, ThermoView Industries, Inc. -- http://www.thv.com/-- designs, manufactures, markets and installs replacement windows and doors for residential homeowners. The Company and its subsidiaries filed for chapter 11 protection on Sept. 26, 2005 (Bankr. W.D. Ky. Case Nos. 05-37123 through 05-37132). David M. Cantor, Esq., at Seiller Waterman LLC represents the Debtors. Cathy S. Pike, Esq., represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $3,043,764 in total assets and $34,104,713 in total debts. On Oct. 3, 2006, the Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding. Thomas Frentz, Esq., was appointed as the Chapter 7 trustee. TIG CAPITAL: Moody's Revises Outlook on Preferred Stock to Stable ----------------------------------------------------------------- Moody's Investors Service changed the rating outlook for Fairfax Financial Holdings Ltd.'s Ba3 senior debt rating and TIG Capital Trust I's B2 preferred stock rating to stable from negative. At the same time, Moody's affirmed each entity's ratings. Moody's said the change in outlook reflects the improved liquidity position at the holding company and within FFH's run-off operations. FFH's cash position at the holding company has remained above Moody's expectations for the balance of 2006 because its run-off operations have drained less cash from it than in prior years. Moreover, the company's earlier decision to commute a large adverse development contract freed up funds in the run-off businesses and should prevent further cash drain at the holding company for at least the next two years. Finally, FFH recently disclosed the completion of a public secondary offering of its majority-owned subsidiary, Odyssey Re Holdings Corp., which will net the company an additional $300 million in cash. As a result, FFH will have over $700 million in cash at the holding company level, well in excess of the rating agency's $400 million expectation. Moody's also noted that the improved liquidity conditions at FFH help alleviate the concerns it highlighted in its earlier decision to maintain the negative outlook on the company. On July 31, 2006, Moody's cited concerns about the emergence of material weaknesses in FFH's control environment, the potential for further financial restatements, and the possibility of enhanced regulatory scrutiny and/or fines as the basis for maintaining a negative outlook on the company. In Moody's view, these concerns, though still present in the overall credit profile, no longer warrant a negative outlook. Most importantly, the additional cash at the holding company gives FFH additional cushion to absorb any negative consequences triggered by the aforementioned issues. In addition, the company has taken meaningful steps to remediate its material weaknesses and has provided evidence that suggests its recent financial restatements were largely due to flaws in a now-replaced accounting system used prior to 2001. Finally, although the company remains under investigation by the U.S. Securities and Exchange Commission, Moody's is growing more comfortable that any adverse regulatory developments will be manageable within FFH's current rating. The decision to change the outlook on TIGCT to stable from negative is based on improved operating performance at the TIG Insurance Company, as well as FFH's improved liquidity position discussed above. The rating agency said that FFH's Ba3 rating is based on these expectations: -- holding company cash remains at or above $400 million; -- pre-tax coverage of interest, hybrid fixed payments, and preferred share dividends remains above 1x; -- financial leverage continues to improve moderately with hybrid-adjusted debt to total capital staying below 45%; -- only moderate adverse reserve development after reinsurance with run-off operations operating at or near break-even; and' -- any internal or external investigations into finite transactions or other accounting issues do not result in further material negative impact on FFH's common equity. Fairfax Financial Holdings, based in Toronto, Ontario, is a financial services holding company with subsidiaries engaged in property and liability insurance and reinsurance in Canada, the United States, and internationally. For 2006 year-to-date, Fairfax Financial reported total revenue of $5.2 billion, net income of $68.4 million, and shareholders' equity of $2.7 billion. These ratings were affirmed with the outlook changed to stable from negative: * Fairfax Financial Holdings Ltd. --- senior debt at Ba3; * TIG Capital Trust I -- backed preferred stock at B2. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations. ULTIMATE VENTURES: Cameron Kuipers Barred From Trading Securities ----------------------------------------------------------------- The British Columbia Securities Commission has ordered Cameron Kuipers, president, director and sole owner of Ultimate Ventures Inc. and Trivera Investments Inc., to pay $100,000 for violating securities laws. Mr. Kuipers has also been ordered out of the securities market and barred from investor relations activities for 16 years and cannot be a director or officer of any company. In a settlement with the BCSC, Kuipers admitted that he and his two companies distributed securities without registration or prospectus exemptions under the Securities Act and illegally raised about CDN$4.2 million from investors in British Columbia, Ontario, Alberta, the United States, and other locations. Between Nov. 27, 2001, and March 11, 2003, Ultimate Ventures and Kuipers raised about CDN$2.7 million from 47 investors through the illegal sale of Ultimate securities. From April 12, 2002, to March 3, 2003, Ultimate and Kuipers raised about $1.1 million from 20 U.S. investors. Ultimate and Kuipers illegally exchanged Ultimate securities with investors for life insurance policies and other companies' securities. Between Jan. 1, 2001, and March 17, 2003, Trivera and Kuipers illegally raised about CDN$276,214 from 11 investors mostly from British Columbia. In the settlement, Kuipers admitted that he, Trivera and Ultimate ignored cease-trade orders issued by the BCSC on Dec. 18 and 19, 2002 in issuing some of the Trivera and Ultimate securities. Kuipers also admitted to violating securities laws by acting as an advisor without registration. Kuipers made misrepresentations about the investment in Ultimate securities, including the use of investors' funds as did Ultimate and Trivera. As part of the settlement, the two companies have also been ordered out of trading in the securities market for 16 years. About B.C. Securities Commission The British Columbia Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. About Ultimate Ventures Ultimate Ventures Inc. and its affiliate, Trivera Investments Inc. purchase life insurance policies from elderly and terminally ill people for a percentage of their face values and to assume the obligation to pay the premiums on them. Profits were to flow from the expectation that the policy sellers would die before the cost of paying the premiums exceeded the discount at which the policies had been purchased. Neither of the companies has ever been registered or has filed a prospectus under the Securities Act, Section 161 RSBC 1996, c. 18. UNITED AMERICAN: Sept. 30 Balance Sheet Upside-Down by $520,945 --------------------------------------------------------------- United American reported a $107,562 of net income on $6.5 million of sales for the third quarter ended Sept. 30, 2006, compared with a $293,367 net loss on $1.6 million of sales for the same period in 2005. The increase in net income is primarily due to sales generated by the company's Voice over Internet Protocol gateway in Mali, Africa which was established in May 2006. At Sept. 30, 2006, the company's balance sheet showed $1.49 million in total assets, $1.45 million in total liabilities, and $555,180 in minority interest, resulting in a $520,945 total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $915,814 in total current assets available to pay $1.5 million in total current liabilities. Full-text copies of the company's third quarter financials are available for free at http://researcharchives.com/t/s?1685 Going Concern Doubt As reported in the Troubled Company Report on May 19, 2006, Michael Pollack CPA, in Cherry Hill, New Jersey, raised substantial doubt about United American Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's operating losses and capital deficits. About United American Headquartered in Las Vegas, Nevada, United American Corp. -- http://www.unitedamericancorp.com/-- is a next-generation, facilities-based, marketing and sales-oriented telecommunications holding company. It provides businesses and individuals with a growing suite of innovative retail domestic and international voice and data products and services using Voice Over Internet Protocol. It also offers wholesale (carrier-to-carrier) solutions. UTILITY CRAFT: Wants Plan-Filing Period Stretched to March 17 ------------------------------------------------------------- Utility Craft, Inc., asks the U.S. Bankruptcy Court for the Middle District of North Carolina to extend its exclusive period to file a Chapter 11 Plan of Reorganization and disclosure statement to March 17, 2006. The Debtor tells the Court that it has made substantial progress in the liquidation of its assets and the satisfaction of claims on these assets. Among other things, the Debtor is currently awaiting the completion of its going-out-of-business sale and the resolution of prepetition customer orders. By the end of this year, the Debtor anticipates being able to determine whether sufficient unencumbered assets exist to warrant moving forward with a chapter 11 liquidating plan or whether a Chapter 7 conversion is more appropriate in its case. The Court will convene a hearing at 9:30 a.m. on Jan. 16, 2007, to consider the Debtor's request. The hearing will be held at Courtroom 3, Second Floor, 101 South Edgeworth Street in Greensboro, North Carolina. Headquartered in High Point, North Carolina, Utility Craft, Inc., dba Wood Armfield Furniture, specializes in manufacturing high quality furniture and accessories. The Company filed for chapter 11 protection on July 20, 2006 (Bankr. M.D. N.C. Case No. 06- 10816). Christine L. Myatt, Esq., Benjamin A. Kahn, Esq., J. David Yarbrough, Jr., Esq., at Nexsen Pruet Adams Kleemeier, PLLC, represents the Debtor in its restructuring efforts. Judy D. Thompson, Esq., Deborah M. Tyson, Esq., Diane Furr, Esq., at Poyner & Spruill, LLP, serves the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million and $50 million. UTILITY CRAFT: Court Terminates Access to HPB's Cash Collateral --------------------------------------------------------------- The Honorable Catharine R. Carruthers of the U.S. Bankruptcy Court for the Middle District of North Carolina in Greensboro terminated, effective Oct. 28, 2006, Utility Craft, Inc.'s authority to use cash collateral securing repayment of its debts to High Point Bank and Trust Co. Judge Carruthers notes that all outstanding principal interests and charges owed by the Debtor have been paid. Therefore, Judge Carruthers explains that no further need exists for the Debtor's continued use of the collateral. As of Aug. 31, 2006, the Debtor owed HPB approximately $1,839,369, plus interest, excluding attorney's fees that the Bank may be entitled to recover. The Debtor has reserved $41,000 to pay HPB's attorney's' fees when these fees are approved by the Court. Headquartered in High Point, North Carolina, Utility Craft, Inc., dba Wood Armfield Furniture, specializes in manufacturing high quality furniture and accessories. The Company filed for chapter 11 protection on July 20, 2006 (Bankr. M.D. N.C. Case No. 06- 10816). Christine L. Myatt, Esq., Benjamin A. Kahn, Esq., J. David Yarbrough, Jr., Esq., at Nexsen Pruet Adams Kleemeier, PLLC, represents the Debtor in its restructuring efforts. Judy D. Thompson, Esq., Deborah M. Tyson, Esq., Diane Furr, Esq., at Poyner & Spruill, LLP, serves the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million and $50 million. VERIDICOM INT'L: Sept. 30 Balance Sheet Upside-Down by $5.6 Mil. ---------------------------------------------------------------- Verdicom International Inc. reported a $1.7 net loss on $971,351 of revenues for the third quarter ended Sept. 30, 2006, compared with a $1.6 million net loss on $130,879 of revenues for the same period in 2005. Revenues in the third quarter of 2006 are mainly in respect of VKI, a portable identity device with USB connectivity, on board fingerprint sensor, flash memory, and security software; and a $600,000 sale of a license to technology. All other revenues for the comparative periods are in respect of sales of capacitive fingerprint sensors, computer peripherals and software related to the use of fingerprint authentication technology. At Sept. 30, 2006, the company's consolidated balance sheet showed $5 million in total assets, $10.5 million in total liabilities, and $45,226 in non-controlling interest, resulting in a $5.6 million total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $1.5 million in total current assets available to pay $10.5 million in total current liabilities. Full-text copies of the company's third quarter financials are available for free at http://researcharchives.com/t/s?1686 Going Concern Doubt Manning Elliot LLP, in Vancouver, Canada, raised substantial doubt about Veridicom International's ability to continue as a going concern after auditing the company's amended financial statements for the year ended Dec. 31, 2005. The Firm pointed to the company's recurring losses from operations and working capital deficiency. About Veridicom International Headquartered in Vancouver, British Columbia, Veridicom International, Inc. -- http://www.veridicom.com/-- designs, develops, manufactures, and sells capacitive fingerprint sensors, computer peripherals, and software related to the use of its fingerprint authentication technology. The company has five subsidiaries: EssTec Inc., Veridicom Pakistan (Private) Limited, Veridicom Inc., Cavio Corporation, and Veridicom International (Canada) Inc. WINDSWEPT ENVIRONMENTAL: Earns $14.1 Mil. in Fiscal 2007 1st Qtr. ----------------------------------------------------------------- Windswept Environmental Group Inc. reported $14.1 million of net income on $2.5 million of revenues for the three months ended Sept. 30, 2006, compared with a $25 million net loss on $5.2 million of revenues for the thirteen weeks ended Sept. 27, 2005. The increase in net income is due to a mark-to-market gain on the embedded derivatives in the amount of $15.7 million principally driven by the decrease in the company's common stock price from $0.45 to $0.15, as compared to a loss of $21 million during the thirteen weeks ended Sept. 27, 2005. Total revenues decreased primarily attributable to a decrease of $1.2 million in asbestos, lead and mold work, a decrease of $943,419 in emergency, disaster response and remediation work and a decrease of $589,234 in insurance work. These decreases were partially offset by a $578,119 increase in emergency spills and soil environmental remediation, and a $101,398 increase in training and air monitoring work. At Sept. 30, 2006, the company's balance sheet showed $14.8 million in total assets, $9.6 million in total liabilities, $1.3 million in series A redeemable convertible preferred stock, and $3.9 million in total stockholders equity. Full-text copies of the company's consolidated financial statements for the fiscal quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?1687 Going Concern Doubt Massella & Associates, CPA, PLLC, in Syosset, New York, raised substantial doubt about Windswept Environmental Group Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 28, 2005. The auditor pointed to the company's recurring losses from operations, difficulty in generating sufficient cash flow, and working capital and stockholders' deficiencies. About Windswept Environmental Group Based in Bay Shore, New York, Windswept Environmental Group Inc., through its wholly owned subsidiary, Trade-Winds Environmental Restoration, Inc. -- http://www.tradewindsenvironmental.com/-- provides a full array of emergency response, remediation, disaster restoration and commercial drying services to a broad range of clients. The company specializes in hazardous materials remediation, microbial remediation, testing, toxicology, training, wetlands restoration, wildlife and natural resources rehabilitation, asbestos and lead abatement, technical advisory services, restoration and site renovation services. WINN-DIXIE: Post-Emergence Administrative Bar Date is January 5 --------------------------------------------------------------- In accordance with the Reorganized Winn-Dixie Stores Inc. and its debtor-affiliates' Chapter 11 Plan, all parties-in-interest must file no later than Jan. 5, 2007, all requests for payment of an administrative claim or any claim arising against the Reorganized Debtors between Feb. 21, 2005, and Nov. 21, 2006. All administrative claim payment requests must be made by application filed with the Court and served on the Reorganized Debtors' counsel and the Post-Effective Date Committee. If the Reorganized Debtors object to an application, the Court will determine the allowed amount of the administrative claim. An administrative claim or any claim arising against the Reorganized Debtors between Feb. 21, 2005, and Nov. 21, 2006, that is not asserted in an application filed and served by Jan. 5, 2007, will be forever barred and deemed waived and relinquished in full. The Reorganized Debtors will have no obligation to pay the claim, D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, says. Mr. Baker notes that no application is required with respect to: (a) undisputed postpetition obligation which was paid or is payable by a Reorganized Debtor in the ordinary course of business. In no event will a postpetition obligation that is contingent or disputed, and subject to liquidation through pending or prospective litigation, be considered to be an obligation payable in the ordinary course of business; and (b) cure owing under an executory contract or unexpired lease if the cure amount is fixed or proposed to be fixed by a Court order, pursuant to the Reorganized Debtors' request to assume and fix the cure amount and a timely objection asserting an increased cure amount filed by the non-Debtor party to the subject contract or lease. In addition, all final requests for payment of professional fee claims, pursuant to Sections 327, 328, 330, 331, 503(b), or 1103 of the Bankruptcy Code, must be made no later than Jan. 22, 2007, unless otherwise ordered by the Court. All professional fee payment requests must be made by application filed with the Court and served on the Reorganized Debtors, their counsel, counsel to the Official Committee of Unsecured Creditors or the Post-Effective Date Committee, the fee examiner, and other necessary parties-in-interest. No hearing will be held on an application for a professional fee claim until the fee examiner has completed and filed a report with respect to the claim. Objections to professional fee claim applications must be filed and served on the Reorganized Debtors, their counsel, and the requesting professional or other entity on or before the date that is 30 days after the later of: (i) the date on which the applicable application was served; or (ii) the date on which the fee examiner's report with respect to the applicable professional fee claim was filed. Stock Transfer Restrictions Pursuant to its Amended and Restated Articles of Incorporation, which became effective on Nov. 21, 2006, Winn Dixie Stores Inc. said that it has 54.5 million outstanding shares of common stock. This is the total number of shares of common stock that shareholders should take into account in determining their percentage stock ownership of the company. The company's Amended and Restated Articles of Incorporation provide that, in certain circumstances, transfers of the Winn- Dixie common stock by certain stockholders will be subject to advance notice requirements and possible restriction or prohibition. In this regard, the company notes that, to the best of its knowledge, there is no person who would become a 5% shareholder of the company based on the distributions to which a person was entitled as of November 21, 2006, pursuant to the company's Chapter 11 plan. Winn-Dixie expects to further announce the number of the outstanding shares of its common stock shortly following the beginning of calendar years 2007 and 2008. Termination of Credit Facility and Indenture As of Nov. 21, 2006, the $800,000,000 DIP Credit Facility dated as of Feb. 23, 2005, was terminated. The company's 8.875% senior notes due 2008 in the aggregate principal amount of $300,000,000, guaranteed by certain of the company's subsidiaries, were extinguished, cancelled and are of no further force or effect, except to continue in effect solely for the purposes of allowing the holders to receive distributions provided under the Plan and related matters. Similarly, the Indenture dated as of Dec. 26, 2000, between Winn-Dixie, as issuer; certain subsidiaries of the company, as guarantors; and Wilmington Trust Company, as trustee, was terminated. The Indenture is of no further force or effect, except to carry out certain limited purposes under the Plan in connection with distributions to the holders of notes issued under the Indenture, payment of the trustee's fees, and with respect to the trustee's rights to indemnification under the Indenture. Committee Memberships of the New Board of Directors Effective November 21, 2006, John E. Anderson, T. Wayne Davis, Edward W. Mehrer, Jr., Julia B. North, Carleton T. Rider, H. Jay Skelton, Charles P. Stephens and Ronald Townsend were deemed to have resigned from Winn-Dixie's board of directors as provided in the Plan. Effective the same date, Evelyn V. Follit, Charles P. Garcia, Jeffrey C. Girard, Yvonne R. Jackson, Gregory P. Josefowicz, Terry Peets, and Richard E. Rivera began serving on Reorganized Winn-Dixie's new board. Peter L. Lynch, Winn-Dixie's president and chief executive officer, remains on the board and serves as the chairman. There is currently one vacancy on the board. The new members of the board's committees are: Committees Members ---------- ------- Audit Ms. Follit Mr. Girard Mr. Josefowicz Compensation Ms. Jackson Mr. Peets Mr. Rivera Nominating & Mr. Garcia Governance Mr. Peets In separate Form 3 filings with the Securities and Exchange Commission dated Nov. 28 and Nov. 30, 2006, the new board members disclose that they do not beneficially own any shares of Winn-Dixie's common stock. Headquartered in Jacksonville, Florida, Winn-Dixie Stores Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). XACT AID: Earns $168,842 in First Fiscal Quarter Ended Sept. 30 --------------------------------------------------------------- Xact Aid Inc. reported $168,842 of net income on $14.7 million of sales for the first fiscal quarter ended Sept. 30, 2006, compared with $76,229 of net income on $9.1 million of sales for the same period in 2005. The increase in net income is primarily due to the increase in sales which is attributable to the $5.3 million increase contributed by the new and used vehicles trading segment, partly offset by increased costs of sales and operating expenses. At Sept. 30, 2006, the company's balance sheet showed $21.5 million in total assets, $16.1 million in total liabilities, $2.8 million in minority interests, and $2.7 million in total stockholders' equity. Additionally, accumulated deficit at Sept. 30, 2006, stood at $4.9 million. Full-text copies of the company's first fiscal quarter financials are available for free at http://researcharchives.com/t/s?168c Going Concern Doubt Chang G. Park, CPA, in San Diego, California, raised substantial doubt about Xact Aid Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the fiscal year ended June 30, 2006. The auditor pointed to the company's net losses since inception of $3,371,998. About Xact Aid Through its subsidiary, Technorient Limited, a Hongkong corporation, Xact Aid Inc. offers a diversified range of automotive products and services including sales of new and used vehicles, vehicle maintenance and repair services, and sales of vehicle parts. * Turnaround Expert Solsvig Joins AlixPartners' New York Office --------------------------------------------------------------- AlixPartners reported the addition of Curtis Solsvig to its New York office. Solsvig's experience includes strategy development and assessment, acquisitions and acquisition integration, and exiting non-core or strategically unattractive businesses. He also has deep expertise in operational and system upgrades and efficiency improvement, expense reduction, cash and working capital management, and recruiting and development of management teams. His industry knowledge spans an impressive and lengthy list, including automotive, electronics, steel, construction products, health care, and specialty retail to name a few. His most recent major engagement was as CEO of CornerStone Propane LP, the fifth largest retail propane distributor in the U.S. AlixPartners LLP -- http://www.alixpartners.com/-- is a performance improvement, corporate turnaround and financial advisory services firm. The AlixPartners' "one-stop-shop" suite of services range from financial restructuring and operational performance improvement across all major corporate disciplines (manufacturing, supply chain, IT, sales & marketing, working capital, etc.), to financial advisory services (including financial reporting, corporate governance and investigations) to technology-enabled restructuring and claims management. The firm has more than 500 employees, with offices in Chicago, Dallas, Detroit, Dusseldorf, London, Los Angeles, Milan, Munich, New York, Paris, San Francisco and Tokyo. * BOOK REVIEW: A Treatise on the Right of Property in Tide Waters ----------------------------------------------------------------- Author: Joseph K. Angell Publisher: Beard Books Paperback: 440 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/158798105X/internetbankrupt Joseph Angell's A Treatise on the Right of Property in Tide Waters has been widely received as a leading authority on this topic both in the United States and in England. This was the first detailed work published in the United States concerning principles, which relate to the right of property in tide waters, i.e., those waters in which there is an ebbing and flowing of the tide. There is a broad scope of topics covering such areas as the development of common law doctrines, the right of fishery, delimitation, the right to seaweed, rights acquired by prescription and custom, statutes and usage, adjoining owner rights, and wrecked property thrown on the shore. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Ronald C. Sy, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***